Tax Time Savings

for all with U.S.

Savings Bonds:
Training Webinar
 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
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 Why Saving Matters
Role of Savings: “No one has ever
spent his way
■ emergency reserves out of poverty.”
■ for “get ahead” investments (home, ~ Dr. Michael
education, retirement) Sherraden
■ alternative to costly credit
■ provides sense of security, comfort

Process of Saving:
■ promotes thinking ahead, prioritizing
■ models behavior for kids
■ emotional payoff (pride, satisfaction)

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 But Saving is Hard
Q: How many
Americans
Challenges lower-income savers
currently hold face:
Savings Bonds?
■ Limited income – a minimum wage
A: 55 Million.
(That’s 1 in 6!) 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.

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With Help, Anyone can Save
Some Examples: Tax Clients want to Save
$500 invested in a US
In one matched saving test: In one study,
Savings Bond 49% of for
at 4%
VITA clients
10 years willagreed:
grow to
■ 2,300 people saved $1.3MM - 2.2% of their
income, an average of $550 “I wish
$743.6that when I had
cash, I was better
■ Almost half lived below poverty level; 4 in 5 disciplined & saved it
lived below 2x the poverty line rather than spent it.”
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

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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)

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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?
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 Tax Time Opportunity
Assistance and guidance
from a trusted tax
Key elements to foster saving: preparer is a critical to
helping tax clients save at
■ Funds to Save - $100 billion is tax time
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

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 Something to Consider
For many lower-income clients Buying $100 U.S. Saving
Bonds every year for 20
■ tax season is the only chance each year years would leave a tax
when saving seems possible. client with over $3,000 –
■ a tax preparer may be the only person all enough to fill the gaps in a
child’s college scholarship.
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.

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 A Proposition
How about a “Return to Thrift”? Did You Know?

■ culture that supports saving From 1917-1966, the

YMCA and others
■ more families with financial reserves sponsored “National
■ emphasis on the future, planning Thrift Week,” complete
with local “Thrift
■ especially critical for working families Captains”

But How?
■ need a secure, trustworthy product
■ available to all, at key moments
■ long-term in nature
■ able to be gifted…

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Another Quick Quiz
How many Americans own U.S. Savings Bonds?
■ Over 1 million
■ Over 10 million
■ Over 50 million

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Another 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!

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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 federal
refund in the form of a savings bond.
■ True
■ False

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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 federal
refund in the form of a savings bond.
■ True Yes! Here’s an example…
■ False
1962 Form 1040A
With option to receive refund as U.S. Savings Bond

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 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

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 U.S. Savings Bonds Overview
Series I U.S. Savings Bonds
U.S. Savings Bonds an “IOU” from the US Government:
have been a
popular, respected ■ safe – principal protected by “full faith &
investment option credit of U.S. government”
for over 70 years.
■ 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

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 Important Bond Facts
Redemption (“cashing in”)
■ At most banks & credit unions Proceeds from Savings
Bonds are exempt from
■ Requires valid ID federal tax if used for
secondary education
Minimum holding (check IRS Publication
970 for details).
■ 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

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Savings Bonds as Gifts
In a 2008 study, 68% of
Tax Clients can buy bonds for: buyers purchased
savings bonds for
■ Themselves others, mostly children
■ And/or up to three other people & grandchildren

■ 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

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Example Savings Bond
Issue Date
Purchaser’s Social Security Number

123-45-6789 01 2009

John Q. Saver
123 Main Street
Anywhere, WA 99000-0000
OR Jen Saver
FRB-MPLS
04-15-07
2

:C000090007 :04 000000000000 C000000000I

Owner’s Name & Address (Co-Owner Name, if any) Authentication Stamp

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Bond Features & Benefits

Feature Benefits
Competitive return (.74% Reach saving goal sooner
currently)
No fees No fees to erode savings
Convenient Simple tax site order process saves time

Can buy for others Easy to give savings as a gift

Inflation protection Value not lost as prices rise

Loss & theft protection Savings are safe

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Bonds vs. Savings Accounts or CDs
Savings Bonds: CD-like returns, no fees and a $50 minimum
Typical 1 Year
Typical Savings Series I U.S.
Certificate of
Account* Savings Bond
Deposit (CD)*
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
None 1 year 1 year
Period
3 months interest
Early Redemption All interest earned
None (redemptions within 5
Penalty / Forfeiture to withdrawal date
years of purchase)
ChexSystems Review Yes Yes No
May Buy as a Gift No No Yes

*Source: National Average rates, www.bankrate.com

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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.

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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.

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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

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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.

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 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

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 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

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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%

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 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)

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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

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Presenting Savings
54% of bond purchasers
during the TS ‘07 pilot, said
Consider
Asthey
taxhad
preparer,
no moneyYOU “saved ■ Saving requires many tax clients
play a crucial
or invested” role
prior in a
to buying to take a “leap of faith”
client’s
bonds decision to ● What if they need the money
save for the future -
later? Or their savings disappear?
their own, or that of
their children or ■ Clients generally trust you, their
grandchildren. 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.

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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
Tax Preparers Matter 2. Seek decision – ask client to decide if,
In a 2007 study, 41% of how much & for whom to order bonds
tax clients who saved
part of their refund 3. Process order – complete IRS Form
decided to do so only 8888 and enter name of owner and
after meeting with their
tax preparer. co-owner(s) or beneficiary and
amount for bonds

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Talking with Clients
New Savers?
Bonds are a good fit for… 54% of tax clients who
bought savings bonds
■ Parents / guardians – bonds are in 2007 said they had
no money “saved or
popular gifts for kids
invested” prior to
● 68% of ’08 buyers bought bonds for others buying bonds.
■ 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

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Conversation Starters
When a client
To raise the topic of saving, try speaks:
open-ended questions: • Listen closely
■ I see you have a savings bond brochure; • Look her in the eyes
have you had a chance to look at it – what • Never interrupt
do you think? • Consider repeating
back her key points
■ 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?

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Seeking A Decision
Remember:
• Saving is hard & many
To help clients decide about buying
client’s won’t say “yes.” bonds:
• It is normal for about 1
■ Answer any questions; tactfully correct any
in 10 to order bonds.
• Please keep asking
misinformation
clients about bonds – ■ Briefly re-state 2 or 3 relevant bond features
even if many say “no.” ● For example, “as I mentioned, bonds are very
• Always respect clients’ safe, available for just $50, and earn .74% right
choices, as they know now.”
what’s best for them. ■ Then ask directly, “would you like to order a
savings bond today?”
■ If client declines
● Politely ask them why
● Correct any misunderstandings, ask again

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 Possible Client Concerns
Concern: I can’t afford to save During 2007 & 2008
pilots, bond purchases
■ Response used, on average, 6% of
● Even a little is a start; you can begin for $50 their refund to buy
● You just saved $150 in tax preparer fees - you savings bonds
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

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 Client Concerns (more)
Q: Does one pay
Concern: I’ll save by myself, my own way state or local
Income taxes on
■ Response Savings Bonds?
● It’s great you already have a plan to save! A: No.
● 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.

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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?

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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.

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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?

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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.

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YOU can Encourage Savings Habits

Did you know?

PLEASE:
81% of those who Ask every client who has a refund
bought savings bonds
in 2007 said they were ■ If you don’t, who will?
very happy with their
purchase! ■ 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.

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“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

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Technical Assistance Delivery

 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)

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Join our Campaign

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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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