Despite an improving national economy, 38.3% of Illinois households are in a persistent state of financial insecurity, according to a report released today by the Corporation for Enterprise Development (CFED). The number of households who have little or no savings to cover emergencies or to start building a better life has decreased slightly from last year’s 42% level. The report also found that state policies are doing little to improve the financial security of Illinois residents.
CFED’s 2014 Assets & Opportunity Scorecard defines these financially insecure residents as “liquid asset poor,” which means they lack adequate savings to cover basic expenses at the federal poverty level for even three months in the event of an emergency such as a job loss or health crisis. Included among Illinois’ “liquid asset poor” are a majority of those who live below the official income poverty line of $23,550 for a family of four, as well as many who would consider themselves middle class. Fully 22% of households earning between $62,665 and $102,024 annually have less than three months of savings (i.e., less than $5,887 for a family of four).
“All Illinois residents deserve access to the tools they need to build financially secure futures for themselves and their children,” said Lucy Mullany, Senior Policy Associate with Heartland Alliance and Coordinator of the Illinois Asset Building Group, a Lead State Organization for the National Assets & Opportunity Network. “The data from the Scorecard should motivate state and local policymakers to invest in policies and systems that prevent further asset erosion and remove savings barriers facing so many families.”
One aspect of growing financial insecurity is lack of access to a retirement savings program. The Scorecard found that only 43.8% of all Illinois workers have access to a retirement savings account through their employer. What this means is that more and more hardworking Illinoisans are retiring into poverty. Senator Daniel Biss has introduced SB2758, the Illinois Secure Choice Savings Program, which will provide a much needed retirement savings account for more than 2.5 million private sector workers that currently have no access to this vital savings tool.
“We cannot continue to accept that hardworking Illinoisans are retiring into poverty,” said Mullany. “Illinois needs to invest in employer-based retirement savings programs for all workers. The Illinois Secure Choice Savings Program is a simple, low-cost solution that will provide the retirement security that our families need.”
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, fend off poverty and create a more prosperous future. It explores how well residents are faring in the 50 states and the District of Columbia and assesses policies that are helping residents build and protect assets across the five issue areas. The Scorecard evaluates how residents are faring across 66 outcome measures in five different issue areas. Illinois ranked 33rd in the overall assessment of how residents are faring, remaining unchanged from the 2013 edition of the Scorecard. Illinois received a “C” in Financial Assets & Income, meaning many residents are not building wealth or achieving economic security. The average Illinois borrower is carrying $10,866 in credit card debt (ranked 36th) and the state has a high bankruptcy rate (ranked 45th). Additionally, 7.6% of Illinois households don’t own a bank account, forcing them to rely on check cashers, payday lenders and other non-bank “alternative” providers, or entirely on cash. Illinois received a “D” in Housing & Homeownership, meaning residents do not have the opportunity to own a home or access to an affordable place to live.
Many Illinois households spend more than 30% of their incomes on housing costs: the state ranked 39th for housing cost burden for homeowners and 32nd for housing cost burden for renters. The state also has one of the highest foreclosure rates in the country (ranked 47th).
Heartland Alliance and the Illinois Asset Building Group are advocating for policy solutions that would give families the tools to become financially secure:
- Ensure all workers have the opportunity to build a secure retirement by creating an employment-based retirement savings program.
- Help families save for college by expanding access to the State’ 529 college savings plan through facilitated enrollment and improved savings incentives.
- Raise the minimum wage to over $10 per hour.
- Protect individuals from predatory loans and financial products through stronger regulations. To read an analysis of key findings from the 2014 Assets & Opportunity Scorecard, click here.
To access the complete Scorecard visit http://assetsandopportunity.org/scorecard.
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The Illinois Asset Building Group (IABG) is a statewide coalition committed to increasing access to the tools people need to build financially secure futures for themselves and their children. Our work across issue areas includes examining barriers and solutions to the persistent racial wealth gap. IABG is lead by Heartland Alliance for Human Needs and Human Rights. Our partners include community leaders, service providers, researchers, advocates, and financial institutions.
Heartland Alliance −− the leading anti-poverty organization in the Midwest −− believes that all of us deserve the opportunity to improve our lives. Each year, we help ensure this opportunity for more than one million people around the world who are homeless, living in poverty, or seeking safety. Our policy efforts strengthen communities; our comprehensive services empower those we serve to rebuild and transform their lives.
CFED empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future. As a leading source for data about household financial security and policy solutions, CFED understands what families need to succeed. We promote programs on the ground and invest in social enterprises that create pathways to financial security and opportunity for millions of people. Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.