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Savings Bond Training Webinar

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Savings Bond Training Webinar Savings Bond Training Webinar Presentation Transcript

  • Tax Time Savingsfor all with U.S.Savings Bonds:Training Webinar
  • Why Saving MattersRole of Savings:• emergency reserves• for “get ahead” investments (home, education,retirement)• alternative to costly credit• provides sense of security, comfortProcess of Saving:• promotes thinking ahead, prioritizing• models behavior for kids• emotional payoff (pride, satisfaction)“No one has everspent his wayout of poverty.”~ Dr. Michael Sherraden
  • But Saving is HardChallenges lower-income saversface:• Limited income – a minimum wageworker makes $14K a year.• Consumerism – pressure to buy iseverywhere.• Family & friends – are often in need,creating pressure to share resources.• Few opportunities – most people savewith structured help (e.g., 401(k) plans),but poor people get little or no suchhelp.Q: How manyAmericans currently holdSavings Bonds?A: 55 Million.(That’s 1 in 6!)
  • With Help, Anyone can SaveSome Examples:• In one matched saving test:• 2,300 people saved $1.3MM - 2.2% oftheir income, an average of $550• Almost half lived below poverty level; 4 in5 lived below 2x the poverty line• In test of U.S. Savings Bonds:• 1,385 VITA tax clients (6%) saved$250k+ in bonds for 2,300 people• Buyers’ average income: $20K• Average amount saved: $192$500 invested in a USSavings Bond at 4%for 10 years will growto $743.6Tax Clients want toSaveIn one study, 49% ofVITA clients agreed:“I wish that when I hadcash, I was betterdisciplined & saved itrather than spent it.”
  • A Quick Quiz…Low and moderate income tax filers receive howmuch money each year in federal tax refunds?• $100 million (average of $500 per household)• $1 billion (average of $1,000 per household)• $100 billion+ (average of $1,680 per household)
  • A Quick Quiz…Low and moderate income tax filers receive howmuch money each year in federal tax refunds?• $100 million (average of $500 per household)• $1 billion (average of $1,000 per household)• $100 billion+ (average of $1,680 per household)7• What might help people savesome of these funds?
  • Tax Time OpportunityKey elements to foster saving:• Funds to Save - $100 billion is returned topoor families each yearo On average, $1,680 per householdo Up to 20% of annual income• Assistance – tax preparers can serve astrusted helper to suggest saving• Convenience – saving at tax time requiresno 2ndstep, extra trip to bankAssistance andguidance from atrusted tax preparer isa critical to helping taxclients save at taxtime
  • Something to ConsiderFor many lower-income clients• tax season is the only chance each yearwhen saving seems possible.• a tax preparer may be the only personall year who asks them to think aboutsaving.Most people won’t save unless someoneasks them to consider it.VITA volunteers & staff owe it to theirclients to raise this important topic.Buying $100 U.S. SavingBonds every year for 20 yearswould leave a tax client withover $3,000 – enough to fillthe gaps in a child’s collegescholarship.
  • A PropositionHow about a “Return to Thrift”?• culture that supports saving• more families with financial reserves• emphasis on the future, planning• especially critical for working familiesBut How?• need a secure, trustworthy product• available to all, at key moments• long-term in nature• able to be gifted…Did You Know?From 1917-1966, theYMCA and otherssponsored “National ThriftWeek,” complete with local“Thrift Captains”
  • How many Americans own U.S. Savings Bonds?• Over 1 million• Over 10 million• Over 50 millionAnother Quick Quiz
  • How many Americans own U.S. Savings Bonds?• Over 1 million• Over 10 million• Over 50 million• 55,000,000 Americans own savings bonds – 1 in 6!Another Quick Quiz
  • How many Americans own U.S. Savings Bonds?• Over 50 million• 55,000,000 Americans own savings bonds – 1 in 6!In the 1960s, tax filers could receive their federalrefund in the form of a savings bond.• True• FalseQuick Quiz
  • Yes! Here’s an example…How many Americans own U.S. Savings Bonds?• Over 50 million• 55,000,000 Americans own savings bonds – 1 in 6!In the 1960s, tax filers could receive their federalrefund in the form of a savings bond.• True• FalseQuick Quiz1962 Form 1040AWith option to receive refund as U.S. Savings Bond
  • It’s easy to do on Form 8888Just complete Part II for U.S.Savings Bonds• If bonds are for tax filer justcomplete Line 4• If bonds are for others,complete Lines 5 and 6o If beneficiary check box• Enter amounts on RHS.
  • U.S. Savings Bonds OverviewSeries I U.S. Savings Bondsan “IOU” from the US Government:• safe – principal protected by “full faith &credit of U.S. government”• accessible – buy for as little as $50• smart – solid return (1.18%), no fees• simple – sold at “face value” ($50 buys $50bond), rate adjusts twice a year• long-term – must be held for 1 year before“redemption” (cashing in)• portable – may be redeemed at mostbanks & credit unionsU.S. Savings Bondshave been a popular,respected investmentoption for over 70years.
  • Important Bond FactsRedemption (“cashing in”)• At most banks & credit unions• Requires valid IDMinimum holding• Must be held for 1 year• If redeemed before 5 years, lose 3 months’interestLoss / theft replacement• Complete Treasury Form PD F 4000 or FormPD F 1048• Get signature certification from bank• Mail to TreasuryProceeds from SavingsBonds are exempt fromfederal tax if used forsecondary education(check IRS Publication970 for details).
  • Savings Bonds as GiftsTax Clients can buy bonds for:• Themselves• And/or up to two other people• e.g., kids, grandkids, spouses, nieces /nephews, godchildren, etc.Details• Tax client needs only name of gift recipient(no SSN)• Client & gift recipient will be listed on bondas co-owners• Either party may redeem bondIn a 2008 study, 68% ofbuyers purchased savingsbonds for others, mostlychildren & grandchildren
  • John Q. Saver123 Main StreetAnywhere, WA 99000-0000OR Jen Saver123-45-6789 01 2009FRB-MPLS04-15-072:C000090007 :04 000000000000 C000000000IPurchaser’s Social Security NumberOwner’s Name & Address (Co-Owner Name, if any) Authentication StampIssue DateExample Savings Bond
  • Bond Features & BenefitsBenefitsReach saving goal soonerNo fees to erode savingsSimple tax site order process saves timeEasy to give savings as a giftValue not lost as prices riseFeatureCompetitive return (1.18%currently)No feesConvenientCan buy for othersInflation protectionLoss & theft protection Savings are safe
  • Bonds vs. Savings Accounts or CDsSavings Bonds: CD-like returns, no fees and a $50 minimumTypical SavingsAccount*Typical 1 YearCertificate of Deposit(CD)*Series I U.S.Savings BondRate of Return .51% .80% 1.18%Annual Fees $0 $0 $0Minimum to Open $100 $1,000 $50Rate Fixed No Yes Adjusts bi-annuallyMinimum Holding Period None 1 year 1 yearEarly RedemptionPenalty / ForfeitureNoneAll interest earned towithdrawal date3 months interest(redemptions within 5years of purchase)ChexSystems Review Yes Yes NoMay Buy as a Gift No No Yes*Source: National Average rates, www.bankrate.com
  • And Another QuizWhich of the following are true about Series I U.S.Savings Bonds:A. They pay a competitive interest rate (1.18% currently).B. They can be purchased for as little as $50.C. They can only be redeemed where they were purchased.D. They can be purchased as gifts for anyone else – all you need isthe gift recipients name.
  • And Another QuizWhich of the following are true about Series I U.S.Savings Bonds:A. They pay a competitive interest rate (1.18% currently).B.They can be purchased for as little as $50.C.They can only be redeemed where they were purchased.D.They can be purchased as gifts for anyone else – all you need isthe gift recipients name.All of these statements are true except letter C.U.S. Savings Bonds can be redeemed at most banks and creditunions nationwide, not just where they were purchased.
  • Yet Another QuizHow long must savings bonds be held beforethey may be redeemed?1. 6 months2. 12 months3. 5 years4. They may be redeemed any time
  • Yet Another QuizHow long must savings bonds be held beforethey may be redeemed?1. 6 months2. 12 months3. 5 years4. They may be redeemed any timeU.S. Savings Bonds must be held for at least 12 monthsbefore they may be redeemed.Bond buyers should understand that they can not accessfunds saved in bonds for one year after purchase.
  • Finding: People Want to Save• LMI tax clients value saving 49-63% of buyers saved part ofrefund in the past 48% of decliners• Saving is a growing concern
  • Finding: People Like Savings Bonds• Pleased with bond purchase• Familiar with bonds 65% of tax clients “familiar” (vs. 32% forIRAs) 63% of tax clients had bought bond,received bond as gift or knownsomeone who has owned
  • Finding: Who Saves• Demographics Parents: 70-75% of buyers; grandparents: 4-15% Gender: 79% female Age: ~ 40 years, same as sample Income: average AGI of buyers ~ $20k Ethnicity: African American over represented among buyers;Hispanic slightly under• Other Large tax refund ($3.4k for buyers vs. $1.7k) First time savers: as high as 50%
  • Finding: Why People Save• Who: for kids & grandkids 70%+ of buyers bought for others 59% of buyers “I want to put something awayfor my kid’s future”• What: for education, retirement Children / family (27%), Education (23%),Retirement (18%)• Time horizon: long-term 2/3rds still saved after 3 years (in line withnational average)
  • Finding: How People Decide to Save• When: at “point of sale” ~50% report deciding to save at tax site• How: human contacto “learned about option to buy bonds today…” 79%+ when someone talked to me 12% from brochure or poster 20% before coming to tax site
  • Presenting SavingsConsider• Saving requires many tax clients totake a “leap of faith”o What if they need the money later? Ortheir savings disappear?• Clients generally trust you, their taxpreparer or other VITA staff• You are there at the key moment –when the refund amount is clearAs the face of any savings offer,your role is critical.54% of bond purchasersduring the TS ‘07 pilot,said they had no money“saved or invested” priorto buying bondsAs tax preparer, YOU playa crucial role in a client’sdecision to save for thefuture - their own, or thatof their children orgrandchildren.
  • Bond Order ProcessHow it Works1. Client chooses to order bond in Part II of Form88882. Government mails bonds to clientsYour Role(s)1. Explain opportunity - describe savings bonds& chance to order at tax site2. Seek decision – ask client to decide if, howmuch & for whom to order bonds3. Process order – complete IRS Form 8888and enter name of owner and co-owner(s)or beneficiary and amount for bondsTax Preparers MatterIn a 2007 study, 41% of taxclients who saved part oftheir refund decided to doso only after meeting withtheir tax preparer.
  • Talking with ClientsBonds are a good fit for…• Parents / guardians – bonds are popular giftsfor kidso 68% of ’08 buyers bought bonds for others• First time savers – seeking a safe way tostart savingo Bonds can be ordered for as little as $50• Long-term savers – who want a tool to buildsavings over time• People on ChexSystemsSM– who do notqualify for a bank accountNew Savers?54% of tax clients whobought savings bonds in2007 said they had nomoney “saved or invested”prior to buying bonds.
  • Conversation StartersTo raise the topic of saving, tryopen-ended questions:• I see you have a savings bond brochure; have youhad a chance to look at it – what do you think?• We have a new, free service this year to help yousave; have you heard about it – what questions doyou have?• Have you ever heard of US savings bonds? Whathave you heard? –or- May I tell you about them?• Do you recall how you used last year’s tax refund?What are your plans this year?When a client speaks:• Listen closely• Look her in the eyes• Never interrupt• Consider repeating backher key points
  • Seeking A DecisionTo help clients decide aboutbuying bonds:• Answer any questions; tactfullycorrect any misinformation• Briefly re-state 2 or 3 relevant bondfeatureso For example, “as I mentioned,bonds are very safe, available forjust $50, and earn 1.18% rightnow.”• Then ask directly, “would you like toorder a savings bond today?”• If client declineso Politely ask them whyo Correct any misunderstandings,ask againRemember:• Saving is hard & manyclient’s won’t say “yes.”• It is normal for about 1 in10 to order bonds.• Please keep asking clientsabout bonds – even ifmany say “no.”• Always respect clients’choices, as they knowwhat’s best for them.
  • Possible Client ConcernsConcern: I can’t afford to save• Responseo Even a little is a start; you can begin for $50o You just saved $150 in tax preparer fees - youcould save some of this amounto How did you use last year’s refund? Buy a $50bond & you’ll still have some of your refund nextyearConcern: I don’t trust the government• Responseo 55 million Americans hold Savings Bondso Savings bonds have been sold since 1934o You trust the gov’t to send your refundo The same department that processes your refundissues bondsDuring 2007 & 2008pilots, bond purchasesused, on average, 6% oftheir refund to buysavings bonds
  • Client Concerns (more)Concern: I’ll save by myself, my own way• Responseo It’s great you already have a plan to save!o We are offering another saving option that cansave you time & a trip to the bank.o Bonds are among the safest saving options withvery competitive returns.o You can buy a bond for your kids, grand-kids orothers - bonds make great gifts.o For most of us, if we don’t do it now we maynever do it.o It’s free to split your refund and buy a bond today.Q: Does one pay state orlocal Income taxes onSavings Bonds?A: No.
  • Another OneWhich of the following are good ways to begin aconversation about savings bonds with tax clients?A. Do you want to buy a savings bond?B. Have you heard about our new saving option this year? What questionsdo you have?C. Has anyone talked with you today about savings bonds? What do youthink about them?
  • Another OneWhich of the following are good ways to begin aconversation about savings bonds with tax clients?A. Do you want to buy a savings bond?B.Have you heard about our new saving option this year? What questions do youhave?C. Has anyone talked with you today about savings bonds? What do you thinkabout them?Both letter B & C are good conversation starters.They are open-ended, non-threatening and will help you learn moreabout the client’s thoughts and feelings.
  • Final QuizIf a client says “I’m not interested” which of thefollowing is the best way to respond?A.Fine. How do you want to receive your refund?B.Why? Savings bonds are a great way to save and saving is reallyimportant.C.Okay, that’s fine. Thanks for considering it. It would help me tounderstand why you aren’t interested – could you give me some idea?
  • Final QuizIf a client says “I’m not interested” which of thefollowing is the best way to respond?A. Fine. How do you want to receive your refund?B. Why? Savings bonds are a great way to save and saving is reallyimportant.C. Okay, that’s fine. Thanks for considering it. It would help me tounderstand why you aren’t interested – could you give me some idea?Letter C is the best response.It accepts the client’s answer but keeps the conversation going andprovides an opportunity to identify and correct any misunderstandingsabout savings bonds.
  • PLEASE:Ask every client who has a refund• If you don’t, who will?• Tax time may be a client’s only feasible savingopportunity all year; it may be a year beforethey have another chance.• It never hurts to ask; you can’t be sure who willsay yes unless you ask!• Everyone deserves a chance to decide forthemselves.YOU can Encourage Savings HabitsDid you know?81% of those who boughtsavings bonds in 2007said they were veryhappy with theirpurchase!
  • “Savings is hard. Bonds make it easy”• Multiple dimensions: National vs. Local Offline vs. Online• Lots of outreach into the communities(consumers, gatekeepers, tax preparers)• Support of elected officials• Local media coverage; PSAs, etc.• Social media and campaign web site
  • Training Content and Delivery• One webinar / classroom Powerpoint presentation Why savings matters, savings bond features and how to presentsavings at tax time• Two video presentations: Role play video on how to offer / promote bonds to clients “Bond Stars” video – successful tips from star bond coordinators• Role play script for class room training• FAQs and Guides
  • Training Content and Delivery• Available for download on: www.bondsmakeiteasy.org/taxpreparers/training Please download and e-mail to other sites / organizations interested intraining• Available for viewing, sharing with others, anddownloading on Social Media sites: http://www.slideshare.net/bondsmakeiteasy http://www.scribd.com/bondsmakeiteasyPlease view, read, share, comment, download,train!
  • Marketing / Communication materials• All available onhttp://www.bondsmakeiteasy.org/taxpreparers/materials• Communications toolkit• Outreach collateral Posters, flyers, buttons• Point of Sale collateral (for tax sites)
  • Join our Campaign – offline• Pledge to buy a bond in 2013• Promote it at your tax sites• Build awareness of the policy among your partnersand networkso Include blurbs about the policy in your newsletters or e-mail blastso Encourage public officials to publicize the new policy inconstituent communicationso Have public officials speak about the optiono Work with employers and employee unions to promote theopportunityo Distribute Marketing / collateral (FREE download onwww.bondsmakeiteasy.org/taxpreparers/materials
  • And Online• “Like” BondsMakeitEasy on Facebooko and share the campaign with your family, friends andcolleagues: www.facebook.com/bondsmakeiteasy• “Follow” BondsMakeItEasy on Twitterwww.twitter.com/bondsmakeiteasy.twitt• “View” and “Share” our videos on Youtube
  • Thank you!For more information:• visit:Doorways to Dreams (D2D) Fund at http://www.d2dfund.org/and Bonds Make it Easy at http://bondsmakeiteasy.org/o Preeti Mehtao pmehta@d2dfund.orgo (617)-541-9065• about Series I U.S. Savings Bonds, visit:o The Bureau of Public Debt atwww.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm