As families across the Nation grapple with high costs, the 401Kids Savings Act would create children’s savings accounts for every American child
Alongside bill, Casey releases report detailing how 401Kids works and why we need it
Outside analysis says 401Kids delivers $2.61 in benefits for every $1 invested, from increased income later in life, improved health, additional tax revenues, and lower crime
Washington, D.C. - Today, U.S. Senator Bob Casey (D-PA) joined Senator Ron Wyden (D-OR), Majority Leader Chuck Schumer (D-NY), and Representatives Don Beyer (D-VA), Joyce Beatty (D-OH) and Suzan DelBene (D-WA) to introduce the 401Kids Savings Act. The new bill would create children’s savings accounts (CSAs) for every single child in America, building lifelong wealth and economic self-sufficiency for kids from families with limited resources. Funds from the accounts could be used for post-secondary education, starting a business, buying a house, or retirement security. Along with introducing the bill, Casey also released a new report called “401Kids: Building Wealth for the Next Generation,” which delves into the proposal and examples of how CSAs are already working for kids in several states.
“A lack of income means you can’t get by, but a lack of wealth means you can’t get ahead,” said Senator Casey. “As American families grapple with rising costs, they deserve a way to save not just for their future, but for their children’s future. My 401Kids Savings Act would provide every child in this Nation with the cushion they need to take risks and pursue opportunities to create generational wealth.”
“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,” said Senator Wyden. “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. I’m proud to come from a state that’s an innovator when it comes to helping working people save and build a nest egg, and Senator Casey’s bill is a great opportunity to build on that success.”
“For too many Americans, the promise of the American Dream seems out of reach,” said Majority Leader Schumer. “The 401Kids Saving Act would invest in our nation’s youth and make it easier for future generations of children to build savings, escape poverty and obtain economic security. No one should miss out on the opportunity to go to college, own a home, or start a business because they don’t come from a wealthy family. This legislation would ensure that every child in America has much more ability to reach their full potential.”
“Wealth inequality is one of the most intractable challenges facing our nation; it perpetuates injustice, slows economic growth, and fosters political dysfunction. Our bill would help reverse this worsening trend by ensuring that all children entering adulthood have the means to invest in their future,” said Rep. Beyer. “The positive effects of 401Kids accounts would go far beyond the children and their families who get accounts, because we know that when young adults can pursue education, start businesses, and buy homes, it creates economy-wide benefits. I thank Senator Casey and our other colleagues and partners for their leadership on this crucial legislation.”
“Empowering children, particularly those from middle- and working-class families, to save and build wealth throughout their lifetime will instill financial capability in our young people, pave the way to lasting economic prosperity, and accomplish meaningful progress towards mending the racial wealth gap,” said Rep. Beatty. “As co-chair of the Financial Literacy and Wealth Creation Caucus, I am honored to lead the bicameral 401Kids Savings Act with Reps. Beyer and DelBene to give America’s youth the head start they need to pursue a degree, buy a home, or start a small business, enabling them to achieve a bright future.”
“Every child deserves the opportunity to succeed, regardless of their background, family's income, or where they live. Unfortunately, millions of young Americans are on track to have less wealth than their parents did at their age. This is especially true for low-income families and communities of color,” said Rep. DelBene. “This legislation would create universal children’s savings accounts and serve as an important step toward providing children with a financial foundation that will set them up for a successful future, helping them to better afford college, buy a home, or start a business.”
Based on local models around the Nation, the 401Kids Savings Act would create children’s savings accounts that would be built on state 529 college savings platforms and managed by state Treasurers. Once the accounts are established for all newborns and kids under age 18, families, non-profits, employers, foundations, and others could contribute to a 401Kids Account which, starting at age 18, could be used for post-secondary education and training, a small business, a first home or retirement security. While all families could contribute up to $2,500 per year to the accounts, only lower- and moderate-incomes families would receive direct federal support.
According to outside analysis by José Diaz, Chief Economist at the Constellation Fund, for every dollar invested in 401Kids, society would receive at least $2.61 in benefits associated with increased income, improved health, additional tax revenues, and savings to other government sectors.
Senator Casey has long led efforts in the Senate to uplift America’s children and ensure they have the resources and support they need to thrive. In 2021, he released his report, Five Freedoms for America’s Children, in which he outlined “five basic freedoms that our society must guarantee to our Nation’s children”—the freedom to learn, be healthy, well fed, safe from harm and—the subject of this bill—the freedom to be economically secure.
In addition to endorsing the permanent expansion of the Child Tax Credit—the temporary expansion of which, in 2021, led to a historic reduction in child poverty—the “freedom to be economically secure” called for the automation creation of CSAs for every child in America. The 401Kids Savings Act affirms Casey’s commitment to that call.
Endorsing organizations include: the Alfond Scholarship Foundation; The Aspen Institute, Financial Security Program;; California CSA Coalition; Change Machine; Children's Assets Policy Collaborative; City of St. Paul, MN; Commonwealth; Compass Working Capital; Grand Challenge for Social Work; Jesuit Conference Office of Justice and Ecology; National Association of Social Workers; Network Lobby for Catholic Social Justice; Northern California College Promise Coalition; SaverLife; Social Work Grand Challenge to Reduce Extreme Economic Inequality; and Vestwell.
Read the full report about the 401K Savings Act and why we need it here.
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