Encouraging Nonretirement Savings at Tax Time
Final Impact Findings from the SaveUSA Evaluation
Launched in 2011, SaveUSA encourages low- and moderate-income individuals to set aside money from their tax refund for savings. Tax filers at participating Volunteer Income Tax Assistance (VITA) sites can directly deposit all or a portion of their tax refund into a special savings account, set up by a bank or credit union, and pledge to save between $200 and $1,000 of their deposit for about a year. Money can be withdrawn from the accounts at any time and for any purpose, but only those who maintain their initially pledged savings amount throughout a full year receive a 50 percent match on that amount. Account holders, irrespective of match receipt, can deposit tax refund dollars in subsequent years and become eligible to receive additional savings matches on their new tax refund deposits.
This report presents findings on SaveUSA’s implementation in four cities — New York City, Tulsa, Newark, and San Antonio — and on its longer-term effects on savings and other financial outcomes in two cities, New York City and Tulsa. In these latter cities, tax filers interested in SaveUSA in 2011 were randomly selected either to a group whose members were offered the opportunity to open a special savings account (the “SaveUSA group”) or to a group that could not do so (the “Regular Tax Filers” group). The report compares the savings and other financial behaviors of these two groups over time to estimate SaveUSA’s effects. Its findings thus suggest the effects that savings policies structured similarly to SaveUSA’s might have.
SaveUSA’s operation and evaluation were supported by the Social Innovation Fund (SIF), a program of the Corporation for National and Community Service (CNCS). This particular SIF project has been led by the Mayor’s Fund to Advance New York City and the New York City Center for Economic Opportunity (CEO) in collaboration with MDRC. CEO and the New York City Department of Consumer Affairs Office of Financial Empowerment led SaveUSA program operations, and MDRC conducted the program’s evaluation.
SaveUSA was successfully implemented in all four cities. About two-thirds of the SaveUSA group received at least one savings match during the three program years. Across the whole SaveUSA group, total match dollars averaged $365 over the three program years.
As of the 42-month follow-up point, SaveUSA had increased the percentage of individuals with any nonretirement savings by almost 8 percentage points and had increased the average total amount of savings held by $522, or 30 percent, above the average for the group that did not have access to a SaveUSA account. These effects were present even after most of the SaveUSA group no longer had access to a 50 percent match on savings.
- The program led to improvements in some measures of financial security, such as having more cash available to pay for normal household expenses or for emergency or unexpected expenses, that were directly related to (and reflected) the program’s savings increases. SaveUSA had no positive or negative effects on general indicators of financial security, including debt, financial net worth, and incidence of financial hardship.