42% Of Illinois Households Are Liquid Asset Poor

The Corporation for Enterprise Development (CFED) released their 2013 Assets & Opportunity Scorecard last week. The Scorecard offers a comprehensive look at American’s ability to save and build wealth, fend off poverty, and create a more prosperous future. Illinois ranks 33rd in the country overall in the ability of residents to achieve financial security. Our state was evaluated across 53 measures in the areas of Housing & Homeownership, Business and Jobs, Healthcare, Education, and Financial Assets & Income.

The key findings include:

• 55% of Illinois consumers have subprime credit
• 42% of Illinois households live in liquid asset poverty. This means that many households do not have enough savings to live above the federal poverty line for more than 3 months if faced with loss of income.
• Almost 70% of Illinois households of color are liquid asset poor
• 15.3% of households are underbanked or unbanked
• Average college graduate debt is $26,470
• Average credit card debt is $11,505

The release of the Scorecard coincides with the recent release of the Illinois Poverty Report from the Social IMPACT Research Center at Heartland Alliance, which found that 33% of Illinois residents are living in or near poverty. The Scorecard & the Illinois Poverty Report each provide a number of policy recommendations to help Illinois residents build financially secure futures. Recommendations include:

1. Preserve and Expand Homeownership: To reduce the high housing cost burden for homeowners and foreclosure rate, and help maintain homeownership as a route to the middle class, Illinois should offer programs to transition low-income renters to homeowners and enact foreclosure prevention and protection policies.
2. Remove Barriers to Savings: To help families save and become more financially secure, Illinois should remove the disincentive to save for very low income families by lifting asset limits on the Temporary Assistance for Needy Families (TANF) program.
3. Help Families Pay for College: To reduce the high level of educational debt and student loan default rate, Illinois should help families save for college by promoting utilization of the 529 college savings plan through targeted outreach, expanded access, and improved savings incentives.
4. Expand Retirement Savings Opportunities: To address growing retirement insecurity, Illinois should create an automatic retirement account program for Illinois workers that utilizes employer payroll systems and gives workers the option of depositing a portion of earned wages into approved retirement accounts.

As we begin the new legislative session, IABG & Heartland Alliance will be leading efforts to remove the asset limits on TANF and create an opportunity for workers to save for retirement.