Your Financial Future:
West Virginia Rural Retirement Project
While the national financial implications of an aging population that is not prepared for retirement are staggering, in rural communities the problem is more pronounced. There is less opportunity in the rural economy for workers to have access to an employer-supported retirement plan. Many people, especially women, are self-employed or work in the informal economy, doing work for cash and barter.
In West Virginia, the second most rural state in the U.S., women have the lowest workforce participation in the country*, compounding the problems during their retirement years. Since 2003, WISER has been experimenting with innovative grassroots efforts to address this issue through its Rural Retirement Project, staffed by Diane L. Browning.
In partnership with Appalachian By Design (ABD), a grassroots non-profit enterprise, we developed a retirement plan based on the Individual Development Account concept (encouraging savings via training and match programs). Eight self-employed women started self-managed retirement plans and attended financial education classes. In 2008, the project expanded to self-employed childcare workers.
During this phase, it became clear that the best savings vehicle for this group was the Series I Bond. They are trusted, portable, have small minimums, a competitive interest rate (currently 1.38% through April 30, 2014), no administrative fee, do not require a checking account, are issued in paper or on-line, are available at all banks, can be set up with automatic deposits and, importantly for small savers, they are guaranteed.
Each quarter, if participants attend a financial planning workshop and save money by purchasing an I-Bond, their savings is matched by 50%--an effort to simulate a refundable Savers Tax Credit. The project also staffs a VITA (Volunteer Income Tax Assistance) site, since that is a time when refunds and tax credits, particularly the Earned Income Tax Credit, provide low and moderate income workers with discretionary cash that they can be encouraged to save.
As a member of the Savings Bond Working Group facilitated by the non-profit advocacy group D2D**, WISER participated in meetings and outreach to the Bureau of Public Debt and U.S. Treasury that resulted in the savings bond as a purchase option on the tax form beginning in 2010. This administrative change has laid the pathway that makes offering a new type bond, one that is targeted for long term retirement savings (the R bond), practicable as a savings vehicle which can further be incentivized by an amended Savers’ Tax Credit.
To bring the trial project to scale and to build ground-up support for the concept, WISER is in the planning stages of adding three additional test sites during the next year, as well as producing a White Paper that documents the findings. This paper will set forth the social and economic rationale, along with the operational framework, of putting in place a Retirement Bond.
Click here to check out a great New York Times article on savings bonds.
* Status of Women in West Virginia, Institute for Women’s Policy Research, Washington, D.C. 2002.
** D2D has organized demonstration sites at select VITA locations around the country to offer savings bonds to tax filers; their work, compiled in a July 2009 report “Yes We Can: Inclusive Saving At Tax Time” provided the clear evidence of the value of the option to purchase a savings bond at tax time.
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