Reinventing Savings Bonds

Posted: 28 Oct 2005

See all articles by Daniel Schneider

Daniel Schneider

Princeton University

Peter Tufano

Harvard Business School; University of Oxford, Said Business School

Multiple version iconThere are 2 versions of this paper


Savings Bonds have always served multiple objectives: funding the U.S. government, democratizing national financing, and enabling families to save. Increasingly, this last goal has been ignored. A series of efficiency measures introduced in 2003 make these bonds less attractive and less accessible to savers. Public policy should go in the opposite direction: U.S. savings bonds should be reinvigorated to help low and moderate income (LMI) families build assets. More and more, these families' saving needs are ignored by private sector asset managers and marketers. With a few relatively modest changes, the Savings Bond program can be reinvented to help these families save, while still increasing the efficiency of the program as a debt management device. Savings bonds provide market-rate returns, with no transaction costs, and are a useful commitment savings device. Our proposed changes include (a) allowing Federal taxpayers to purchase bonds with tax refunds; (b) enabling LMI families to redeem their bonds before twelve months; (c) leveraging private sector organizations to market savings bonds; and (d) contemplating a role for savings bonds in the life cycles of LMI families.

Keywords: Saving, EITC, Saving Bonds

JEL Classification: D1, E2, G2, H8, I3

Suggested Citation

Schneider, Daniel J. and Tufano, Peter, Reinventing Savings Bonds. Tax Notes, Vol. 109, No. 5, October 31, 2005, Available at SSRN:

Daniel J. Schneider

Princeton University

284 Wallace Hall
Office of Population Research
Princeton, NJ 08544
United States


Peter Tufano (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan Hall 131
Boston, MA 02163
United States

University of Oxford, Said Business School

Park End Street
Oxford, OX1 1HP
Great Britain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics