On Wednesday, U.S. Sen. Bob Casey (D-PA) introduced legislation that would create savings accounts for every child in America.
The legislation, the 401Kids Savings Act, would create a new children’s savings account for every child in the country, allowing them to build lifelong wealth and economic self-sufficiency. It is also sponsored by U.S. Sens. Ron Wyden (D-OR) and Chuck Schumer (D-NY), as well as U.S. Reps. Don Beyer (D-VA), Joyce Beatty (D-OH), and Suzan DelBene (D-WA), the bill would create accounts to be used for post-secondary education, starting a business or buying a house, the lawmakers said.
“A lack of income means you can’t get by, but a lack of wealth means you can’t get ahead,” Casey said. “As American families grapple with rising costs, they deserve a way to save not just for their future, but for their children’s future.”
The legislation is based on local models around the country, and would build on state 529 college savings platforms. Managed by state Treasurers, the accounts would be established for all newborns and kids under at 18. Families, non-profits, employers, foundations and others could contribute to the account, and at age 18, the account holders could access the funds for post-secondary education and training, starting a small business, buying a home or put away as retirement security. While families could contribute up to $2,500 per year, only lower- and moderate-income families would receive federal support.
“Part of the story of America is that anybody can get ahead with enough hard work and determination, but with every passing generation, young people are feeling less confident that that kind of opportunity still exists for them. It’s hard to climb the economic ladder when you’re buried under student loan debt or held down by the rising cost of housing,” Wyden said. “Senator Casey’s bill is about restoring economic opportunity for young people with a smart approach that will give kids a brighter future, put families on stronger financial footing and pay dividends for our economy nationwide.”
Outside analysis has found that for every dollar invested in 401Kids accounts, society would receive at least $2.61 in benefits form increased income, improved health, additional tax revenues and savings to other government sectors.