Tax Time Savings
for all with U.S.
Savings Bonds:
Training Webinar
2
A Savings Crisis
Some alarming facts:
■ Americans had stopped saving –
in early 2008 our personal savings
rate fell to j...
3
Why Saving Matters
Role of Savings:
■ emergency reserves
■ for “get ahead” investments (home,
education, retirement)
■ a...
4
But Saving is Hard
Challenges lower-income
savers face:
■ Limited income – a minimum
wage worker makes $15K a year.
■ Co...
5
With Help, Anyone can Save
Some Examples:
In one matched saving test:
■ 2,300 people saved $1.3MM - 2.2%
of their income...
6
A Quick Quiz…
Low and moderate income tax filers receive how
much money each year in federal tax refunds?
■ $100 million...
7
A Quick Quiz…
Low and moderate income tax filers receive how
much money each year in federal tax refunds?
■ $100 million...
8
Tax Time Opportunity
Key elements to foster saving:
■ Funds to Save - $100 billion is
returned to poor families each yea...
9
Something to Consider
For many lower-income clients
■ tax season is the only chance each
year when saving seems possible...
10
A Proposition
How about a “Return to Thrift”?
■ culture that supports saving
■ more families with financial reserves
■ ...
11
How many Americans own U.S. Savings Bonds?
■ Over 1 million
■ Over 10 million
■ Over 50 million
Another Quick Quiz
12
How many Americans own U.S. Savings Bonds?
■ Over 1 million
■ Over 10 million
■ Over 50 million
55,000,000 Americans ow...
13
How many Americans own U.S. Savings Bonds?
■ Over 50 million
55,000,000 Americans own savings bonds – 1 in 6!
In the 19...
14
Yes! Here’s an example…
How many Americans own U.S. Savings Bonds?
■ Over 50 million
55,000,000 Americans own savings b...
15
It’s easy to do on Form 8888
Just complete Part II for
U.S. Savings Bonds
If bonds are for tax filer
just complete Lin...
16
U.S. Savings Bonds Overview
Series I U.S. Savings Bonds
an “IOU” from the US Government:
■ safe – principal protected b...
17
Important Bond Facts
Redemption (“cashing in”)
■ At most banks & credit unions
■ Requires valid ID
Minimum holding
■ Mu...
18
Savings Bonds as Gifts
Tax Clients can buy bonds for:
■ Themselves
■ And/or up to three other people
■ e.g., kids, gran...
19
John Q. Saver
123 Main Street
Anywhere, WA 99000-0000
OR Jen Saver
123-45-6789 01 2009
FRB-MPLS
04-15-07
2
:C000090007 ...
20
Bond Features & Benefits
Benefits
Reach saving goal sooner
No fees to erode savings
Simple tax site order process saves...
21
Bonds vs. Savings Accounts or CDs
Savings Bonds: CD-like returns, no fees and a $50 minimum
Typical Savings
Account*
Ty...
22
And Another Quiz
Which of the following are true about Series I
U.S. Savings Bonds:
A. They pay a competitive interest ...
23
And Another Quiz
Which of the following are true about Series I
U.S. Savings Bonds:
A. They pay a competitive interest ...
24
Yet Another Quiz
How long must savings bonds be held before
they may be redeemed?
A. 6 months
B. 12 months
C. 5 years
D...
25
Yet Another Quiz
How long must savings bonds be held before
they may be redeemed?
A. 6 months
B. 12 months
C. 5 years
D...
26
Finding: People Want to Save
 LMI tax clients value saving
● 49-63% of buyers saved part of
refund in the past
● 48% o...
27
Finding: People Like Savings Bonds
 Pleased with bond purchase
 Familiar with bonds
● 65% of tax clients “familiar” (...
28
Finding: Who Saves
 Demographics
● Parents: 70-75% of buyers; grandparents: 4-15%
● Gender: 79% female
● Age: ~ 40 yea...
29
Finding: Why People Save
 Who: for kids & grandkids
● 70%+ of buyers bought for others
● 59% of buyers “I want to put ...
30
Finding: How People Decide to Save
 When: at “point of sale”
● ~50% report deciding to save at tax site
 How: human c...
31
Presenting Savings
Consider
■ Saving requires many tax
clients to take a “leap of faith”
● What if they need the money
...
32
Bond Order Process
How it Works
1. Client chooses to order bond in Part II
of Form 8888
2. Government mails bonds to cl...
33
Talking with Clients
Bonds are a good fit for…
■ Parents / guardians – bonds are
popular gifts for kids
● 68% of ’08 bu...
34
Conversation Starters
To raise the topic of saving, try
open-ended questions:
■ I see you have a savings bond brochure;...
35
Seeking A Decision
To help clients decide about
buying bonds:
■ Answer any questions; tactfully correct
any misinformat...
36
Possible Client Concerns
Concern: I can’t afford to save
■ Response
● Even a little is a start; you can begin for $50
●...
37
Client Concerns (more)
Concern: I’ll save by myself, my own way
■ Response
● It’s great you already have a plan to save...
38
Another One
Which of the following are good ways to begin a
conversation about savings bonds with tax clients?
A. Do yo...
39
Another One
Which of the following are good ways to begin a
conversation about savings bonds with tax clients?
A. Do yo...
40
Final Quiz
If a client says “I’m not interested” which of the
following is the best way to respond?
A. Fine. How do you...
41
Final Quiz
If a client says “I’m not interested” which of the
following is the best way to respond?
A. Fine. How do you...
42
PLEASE:
Ask every client who has a refund
■ If you don’t, who will?
■ Tax time may be a client’s only feasible
saving o...
43
“Savings is hard. Bonds make it easy”
 Multiple dimensions:
● National vs. Local
● Offline vs. Online
 National media...
44
 Multiple delivery mechanisms for training,
marketing materials (if you’d like them)
 Social Media
■ Facebook, Twitte...
45
Join our Campaign
46
Thank you!
For more information:
■ visit:Doorways to Dreams (D2D) Fund at
www.d2dfund.org
● Preeti Mehta
pmehta@d2dfund...
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Low Risk Tax-Time Savings For All

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http://bondsmakeiteasy.org This presentation can be used by tax sites to train staff and tax preparers about the new opportunity for their tax clients to save a portion of their refunds directly on the tax form into U.S. Series I Savings Bonds. It provides information on why savings matters, the features of U.S. Savings Bonds, and how to present savings at tax time. This presentation is usually delivered as a webinar, but can also be used in a classroom setting.

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Low Risk Tax-Time Savings For All

  1. 1. Tax Time Savings for all with U.S. Savings Bonds: Training Webinar
  2. 2. 2 A Savings Crisis Some alarming facts: ■ Americans had stopped saving – in early 2008 our personal savings rate fell to just 0.1%. ■ Debt has grown – from 1994 to 2008, average family credit card debt doubled from $4.3k to $9.6k. ■ Inequality is high – the bottom 40% of Americans own 5% of the nation’s wealth. ■ Vulnerable are hardest hit – poorest 25% of families have negative net worth. ■ Finally, a window of opportunity to help people save again - the savings rate is creeping upward as a result of the recession
  3. 3. 3 Why Saving Matters Role of Savings: ■ emergency reserves ■ for “get ahead” investments (home, education, retirement) ■ alternative to costly credit ■ provides sense of security, comfort Process of Saving: ■ promotes thinking ahead, prioritizing ■ models behavior for kids ■ emotional payoff (pride, satisfaction) “No one has ever spent his way out of poverty.” ~ Dr. Michael Sherraden
  4. 4. 4 But Saving is Hard Challenges lower-income savers face: ■ Limited income – a minimum wage worker makes $15K a year. ■ Consumerism – pressure to buy is everywhere. ■ Family & friends – are often in need, creating pressure to share resources. ■ Few opportunities – most people save with structured help (e.g., 401(k) plans), but poor people get little or no such help. Q: How many Americans currently hold Savings Bonds? A: 55 Million. (That’s 1 in 6!)
  5. 5. 5 With Help, Anyone can Save Some Examples: In one matched saving test: ■ 2,300 people saved $1.3MM - 2.2% of their income, an average of $550 ■ Almost half lived below poverty level; 4 in 5 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 US Savings Bond at 4% for 10 years will grow to $743.6 Tax Clients want to Save In one study, 49% of VITA clients agreed: “I wish that when I had cash, I was better disciplined & saved it rather than spent it.”
  6. 6. 6 A Quick Quiz… Low and moderate income tax filers receive how much 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. 7. 7 A Quick Quiz… Low and moderate income tax filers receive how much 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 save some of these funds?
  8. 8. 8 Tax Time Opportunity Key elements to foster saving: ■ Funds to Save - $100 billion is returned to poor families each year ● On average, $1,680 per household ● Up to 20% of annual income ■ Assistance – tax preparers can serve as trusted helper to suggest saving ■ Convenience – saving at tax time requires no 2nd step, extra trip to bank Assistance and guidance from a trusted tax preparer is a critical to helping tax clients save at tax time
  9. 9. 9 Something to Consider For many lower-income clients ■ tax season is the only chance each year when saving seems possible. ■ a tax preparer may be the only person all year who asks them to think about saving. Most people won’t save unless someone asks them to consider it. VITA volunteers & staff owe it to their clients to raise this important topic. Buying $100 U.S. Saving Bonds every year for 20 years would leave a tax client with over $3,000 – enough to fill the gaps in a child’s college scholarship.
  10. 10. 10 A Proposition How about a “Return to Thrift”? ■ culture that supports saving ■ more families with financial reserves ■ emphasis on the future, planning ■ especially critical for working families But 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, the YMCA and others sponsored “National Thrift Week,” complete with local “Thrift Captains”
  11. 11. 11 How many Americans own U.S. Savings Bonds? ■ Over 1 million ■ Over 10 million ■ Over 50 million Another Quick Quiz
  12. 12. 12 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
  13. 13. 13 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 federal refund in the form of a savings bond. ■ True ■ False Quick Quiz
  14. 14. 14 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 federal refund in the form of a savings bond. ■ True ■ False Quick Quiz 1962 Form 1040A With option to receive refund as U.S. Savings Bond
  15. 15. 15 It’s easy to do on Form 8888 Just complete Part II for U.S. Savings Bonds If bonds are for tax filer just complete Line 4 If bonds are for others, complete Lines 5 and 6 ■ If beneficiary check box Enter amounts on RHS .
  16. 16. 16 U.S. Savings Bonds Overview Series I U.S. Savings Bonds an “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 (.74%), no fees ■ simple – sold at “face value” ($50 buys $50 bond), rate adjusts twice a year ■ long-term – must be held for 1 year before “redemption” (cashing in) ■ portable – may be redeemed at most banks & credit unions U.S. Savings Bonds have been a popular, respected investment option for over 70 years.
  17. 17. 17 Important Bond Facts Redemption (“cashing in”) ■ At most banks & credit unions ■ Requires valid ID Minimum holding ■ Must be held for 1 year ■ If redeemed before 5 years, lose 3 months’ interest Loss / theft replacement ■ Complete Treasury Form PDF 1048 ■ Get signature certification from bank ■ Mail to Treasury Proceeds from Savings Bonds are exempt from federal tax if used for secondary education (check IRS Publication 970 for details).
  18. 18. 18 Savings Bonds as Gifts Tax Clients can buy bonds for: ■ Themselves ■ And/or up to three 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 bond as co-owners ■ Either party may redeem bond In a 2008 study, 68% of buyers purchased savings bonds for others, mostly children & grandchildren
  19. 19. 19 John Q. Saver 123 Main Street Anywhere, WA 99000-0000 OR Jen Saver 123-45-6789 01 2009 FRB-MPLS 04-15-07 2 :C000090007 :04 000000000000 C000000000I Purchaser’s Social Security Number Owner’s Name & Address (Co-Owner Name, if any) Authentication Stamp Issue Date Example Savings Bond
  20. 20. 20 Bond Features & Benefits Benefits Reach saving goal sooner No fees to erode savings Simple tax site order process saves time Easy to give savings as a gift Value not lost as prices rise Feature Competitive return (.74% currently) No fees Convenient Can buy for others Inflation protection Loss & theft protection Savings are safe
  21. 21. 21 Bonds vs. Savings Accounts or CDs Savings Bonds: CD-like returns, no fees and a $50 minimum Typical Savings Account* Typical 1 Year Certificate of Deposit (CD)* Series I U.S. Savings Bond Rate of Return .17% .53% .74% Annual Fees $0 $0 $0 Minimum to Open $100 $1,000 $50 Rate Fixed No Yes Adjusts bi-annually Minimum Holding Period None 1 year 1 year Early Redemption Penalty / Forfeiture None All interest earned to withdrawal date 3 months interest (redemptions within 5 years of purchase) ChexSystems Review Yes Yes No May Buy as a Gift No No Yes *Source: National Average rates, www.bankrate.com
  22. 22. 22 And Another Quiz Which of the following are true about Series I U.S. Savings Bonds: A. They pay a competitive interest rate (.74% 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 is the gift recipient's name.
  23. 23. 23 And Another Quiz Which of the following are true about Series I U.S. Savings Bonds: A. They pay a competitive interest rate (.74% 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 is the gift recipient's name. All of these statements are true except letter C. U.S. Savings Bonds can be redeemed at most banks and credit unions nationwide, not just where they were purchased.
  24. 24. 24 Yet Another Quiz How long must savings bonds be held before they may be redeemed? A. 6 months B. 12 months C. 5 years D. They may be redeemed any time
  25. 25. 25 Yet Another Quiz How long must savings bonds be held before they may be redeemed? A. 6 months B. 12 months C. 5 years D. They may be redeemed any time U.S. Savings Bonds must be held for at least 12 months before they may be redeemed. Bond buyers should understand that they can not access funds saved in bonds for one year after purchase.
  26. 26. 26 Finding: People Want to Save  LMI tax clients value saving ● 49-63% of buyers saved part of refund in the past ● 48% of decliners  Saving is a growing concern
  27. 27. 27 Finding: People Like Savings Bonds  Pleased with bond purchase  Familiar with bonds ● 65% of tax clients “familiar” (vs. 32% for IRAs) ● 63% of tax clients had bought bond, received bond as gift or known someone who has owned
  28. 28. 28 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%
  29. 29. 29 Finding: Why People Save  Who: for kids & grandkids ● 70%+ of buyers bought for others ● 59% of buyers “I want to put something away for 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 with national average)
  30. 30. 30 Finding: How People Decide to Save  When: at “point of sale” ● ~50% report deciding to save at tax site  How: human contact ■ “learned about option to buy bonds today…” ● 79%+ when someone talked to me ● 12% from brochure or poster ● 20% before coming to tax site
  31. 31. 31 Presenting Savings Consider ■ Saving requires many tax clients to take a “leap of faith” ● What if they need the money later? Or their savings disappear? ■ Clients generally trust you, their tax preparer or other VITA staff ■ You are there at the key moment – when the refund amount is clear As the face of any savings offer, your role is critical. 54% of bond purchasers during the TS ‘07 pilot, said they had no money “saved or invested” prior to buying bonds As tax preparer, YOU play a crucial role in a client’s decision to save for the future - their own, or that of their children or grandchildren.
  32. 32. 32 Bond Order Process How it Works 1. Client chooses to order bond in Part II of Form 8888 2. Government mails bonds to clients Your Role(s) 1. Explain opportunity - describe savings bonds & chance to order at tax site 2. Seek decision – ask client to decide if, how much & for whom to order bonds 3. Process order – complete IRS Form 8888 and enter name of owner and co-owner(s) or beneficiary and amount for bonds Tax Preparers Matter In a 2007 study, 41% of tax clients who saved part of their refund decided to do so only after meeting with their tax preparer.
  33. 33. 33 Talking with Clients Bonds are a good fit for… ■ Parents / guardians – bonds are popular gifts for kids ● 68% of ’08 buyers bought bonds for others ■ First time savers – seeking a safe way to start saving ● Bonds can be ordered for as little as $50 ■ Long-term savers – who want a tool to build savings over time ■ People on ChexSystemsSM – who do not qualify for a bank account New Savers? 54% of tax clients who bought savings bonds in 2007 said they had no money “saved or invested” prior to buying bonds.
  34. 34. 34 Conversation Starters To raise the topic of saving, try open-ended questions: ■ I see you have a savings bond brochure; have you had a chance to look at it – what do you think? ■ We have a new, free service this year to help you save; have you heard about it – what questions do you have? ■ Have you ever heard of US savings bonds? What have 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 back her key points
  35. 35. 35 Seeking A Decision To help clients decide about buying bonds: ■ Answer any questions; tactfully correct any misinformation ■ Briefly re-state 2 or 3 relevant bond features ● For example, “as I mentioned, bonds are very safe, available for just $50, and earn . 74% right now.” ■ Then ask directly, “would you like to order a savings bond today?” ■ If client declines ● Politely ask them why ● Correct any misunderstandings, ask again Remember: • Saving is hard & many client’s won’t say “yes.” • It is normal for about 1 in 10 to order bonds. • Please keep asking clients about bonds – even if many say “no.” • Always respect clients’ choices, as they know what’s best for them.
  36. 36. 36 Possible Client Concerns Concern: I can’t afford to save ■ Response ● Even a little is a start; you can begin for $50 ● You just saved $150 in tax preparer fees - you could save some of this amount ● How did you use last year’s refund? Buy a $50 bond & you’ll still have some of your refund next year Concern: I don’t trust the government ■ Response ● 55 million Americans hold Savings Bonds ● Savings bonds have been sold since 1934 ● You trust the gov’t to send your refund ● The same department that processes your refund issues bonds During 2007 & 2008 pilots, bond purchases used, on average, 6% of their refund to buy savings bonds
  37. 37. 37 Client Concerns (more) Concern: I’ll save by myself, my own way ■ Response ● It’s great you already have a plan to save! ● We are offering another saving option that can save you time & a trip to the bank. ● Bonds are among the safest saving options with very competitive returns. ● You can buy a bond for your kids, grand- kids or others - bonds make great gifts. ● For most of us, if we don’t do it now we may never do it. ● It’s free to split your refund and buy a bond today. Q: Does one pay state or local Income taxes on Savings Bonds? A: No.
  38. 38. 38 Another One Which of the following are good ways to begin a conversation 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 you have? C. Has anyone talked with you today about savings bonds? What do you think about them?
  39. 39. 39 Another One Which of the following are good ways to begin a conversation 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 you have? C. Has anyone talked with you today about savings bonds? What do you think about them? Both letter B & C are good conversation starters. They are open-ended, non-threatening and will help you learn more about the client’s thoughts and feelings.
  40. 40. 40 Final Quiz If a client says “I’m not interested” which of the following 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 really important. C. Okay, that’s fine. Thanks for considering it. It would help me to understand why you aren’t interested – could you give me some idea?
  41. 41. 41 Final Quiz If a client says “I’m not interested” which of the following 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 really important. C. Okay, that’s fine. Thanks for considering it. It would help me to understand 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 and provides an opportunity to identify and correct any misunderstandings about savings bonds.
  42. 42. 42 PLEASE: Ask every client who has a refund ■ If you don’t, who will? ■ Tax time may be a client’s only feasible saving opportunity all year; it may be a year before they have another chance. ■ It never hurts to ask; you can’t be sure who will say yes unless you ask! ■ Everyone deserves a chance to decide for themselves. YOU can Encourage Savings Habits Did you know? 81% of those who bought savings bonds in 2007 said they were very happy with their purchase!
  43. 43. 43 “Savings is hard. Bonds make it easy”  Multiple dimensions: ● National vs. Local ● Offline vs. Online  National media coverage of the campaign  Potential national launch in D.C.  Boston and Philadelphia are our “launch” or “demo” cities ● 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
  44. 44. 44  Multiple delivery mechanisms for training, marketing materials (if you’d like them)  Social Media ■ Facebook, Twitter ■ Slide Share (for collaborative development, comments)  Download via web site  Call to action (Join our campaign) ■ Let us know what assistance you need (marketing, training) Technical Assistance Delivery
  45. 45. 45 Join our Campaign
  46. 46. 46 Thank you! For more information: ■ visit:Doorways to Dreams (D2D) Fund at www.d2dfund.org ● Preeti Mehta pmehta@d2dfund.org (617)-541-9065 ■ about Series I U.S. Savings Bonds, visit: ● The Bureau of Public Debt at www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm
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