Opportunity and Ownership: Financial Health

For households headed by persons with disabilities, savings can provide near-term protection against hardship. Analysis of longitudinal data from the 2001 panel of the Survey of Income and Program Participation indicates that households with $2,000 or more in liquid assets (interest-earning assets held at financial institutions) are better able to avoid subsequent hardships such as forgone doctor visits and missed utility payments, compared to those with smaller (or no) asset holdings. This evidence has implications for possible increases in the resource limits for the Supplemental Security Income (SSI) program, now $2,000 for individuals and $3,000 for couples.

Savings can help low-income households cope with income Instability and unexpected expenses, according to new evidence presented here. For households with nonelderly heads in the lowest income quintile, modest holdings of liquid assets (amounts up to $1,999) can significantly reduce the probability of hardships with health care, housing payments, food security, utility and phone bills, and basic consumption. Programs to promote saving can help low-income households protect themselves from economic shocks, as income variability, in addition to low income, increases risk of such hardships.

Low-wage jobs can be unstable, leaving families struggling to cope with employment gaps and financial emergencies that can strike without warning. About four in five low-income families are "asset poor," lacking enough liquid savings to live for three months at the federal poverty level without earnings. In this essay, McKernan and Ratcliffe suggest a cluster of policies that would improve financial markets and savings opportunities for low-income families across the life cycle.

Nearly one quarter of low-income families do not have a checking or savings account, more than one-third do not own cars, 60 percent do not own a home, and 90 percent have no retirement account. In contrast, the typical middle-income family has checking or savings accounts, retirement accounts, owns a car and a home. This brief synthesizes current research on the assets and liabilities of low-income families into a variety of portraits and provides suggestions for future research and policy.

Financial assistance from family and friends is an important resource for lower-income families dealing with difficult economic circumstances. This fact examines what percent of respondents in low-income neighborhoods gave financial help, either to family and friends or to other people they live with, in the last 12 months. The percentage of respondents who gave financial help is high 39 percent, with substantial variation within immigrant and U.S.-born respondent groups by race and ethnicity in the proportion that gave and where the assistance was sent