Bill Overview
Title: Savings Security Act of 2022
Description: This bill increases during periods of higher inflation the annual purchase limit applicable to certain government bonds. Specifically, individuals may annually purchase up to $30,000 in Series I U.S. savings bonds when, during that year, the six-month average consumer price index is above 3.5%. Currently, annual purchases are capped at $15,000 per person.
Sponsors: Sen. Fischer, Deb [R-NE]
Target Audience
Population: Individuals purchasing Series I U.S. savings bonds during periods of higher inflation
Estimated Size: 4000000
- The bill concerns Series I U.S. savings bonds, which are financial instruments available to the public.
- The population interested in purchasing Series I savings bonds during times of higher inflation will be impacted.
- This is a financial product that may be more attractive to individuals concerned about inflation, likely including middle and upper-middle-class individuals seeking to protect savings.
- Individuals with the financial means to invest up to the limit of $30,000 in savings bonds per year would specifically be impacted.
- This policy change effectively doubles the purchase limit for Series I bonds in scenarios of high inflation, thus impacting those who maximize their bond purchases.
Reasoning
- Series I savings bonds are traditionally more popular among people with a stable financial background who have discretionary funds to save and invest, as their benefits are tailored toward higher savings capability.
- During high inflation periods, such investments become more attractive as they offer protection against the erosion of savings value. Therefore, the policy should mainly impact middle-class and upper-middle-class individuals who routinely invest in government bonds for savings.
- The target group is limited, considering the policy impacts individuals who can utilize the full increased purchase limit, indicating a higher income bracket.
- Considering the financial capacity required to invest $30,000 annually in Series I bonds, those impacted are likely a smaller subset of the population with sufficient wealth, alongside an interest in leveraging government securities to hedge against inflation.
- The budget constraints of $10.5 million in the first year suggest that the policy's direct fiscal impact is notably limited, likely pointing to indirect benefits such as increased private savings reducing reliance on social programs.
Simulated Interviews
Financial Analyst (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- I regularly advise clients on securing investments against inflation.
- This policy allows for larger investment in a safe government-backed asset, which is appealing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 7 |
Retired (San Francisco, CA)
Age: 55 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- Having more options to protect my savings from inflation is reassuring.
- I appreciate the ability to purchase more when inflation is high.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Small Business Owner (Austin, TX)
Age: 38 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 3/20
Statement of Opinion:
- The policy doesn't directly impact my current financial strategy, as I don't have plans to purchase bonds.
- It's a good option to have for future consideration if my business earns more revenue.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 7 | 7 |
Software Engineer (Chicago, IL)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- I'm in a phase of paying off debt, not investing heavily in government bonds.
- The policy may be beneficial once I'm able to save more aggressively.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 8 | 8 |
Teacher (Miami, FL)
Age: 62 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Stability of savings is crucial as we enter retirement, so having a secured option like bonds is valuable.
- We may consider this in our portfolio to balance risk.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Entrepreneur (Seattle, WA)
Age: 40 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- Considering my uncertain income, I need flexible financial instruments.
- This bond option could be a good safer place for spare earnings during high inflation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Doctor (Denver, CO)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- I'm always looking for ways to safeguard my income against inflation.
- This allows me a greater opportunity to increase my investment in a secure manner.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Accountant (Philadelphia, PA)
Age: 35 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- Currently focused on reducing student loans, so my investment capacity is low.
- The policy might be of interest later when I can prioritize saving.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Real Estate Investor (Atlanta, GA)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Having additional means to secure funds during inflation is beneficial.
- I have other investments but leveraging this option is wise.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Marketing Manager (Boston, MA)
Age: 33 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- My current focus is on short-term savings for the wedding, not long-term investments.
- I might look into bonds post-marriage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $10500000 (Low: $9000000, High: $12000000)
Year 2: $11000000 (Low: $10000000, High: $13000000)
Year 3: $11500000 (Low: $10500000, High: $13500000)
Year 5: $12500000 (Low: $11000000, High: $14000000)
Year 10: $13500000 (Low: $12000000, High: $15000000)
Year 100: $15000000 (Low: $13000000, High: $17000000)
Key Considerations
- The policy only triggers during periods of inflation when the CPI is above 3.5%.
- Estimates heavily depend on prevailing inflation rates and consumer responses to bond purchase limit changes.
- Potential impacts on the broader financial market, as well as on individual savings behavior during inflation, should be considered.
- Changes in bond purchase limits can affect both the savings levels and the financial markets' dynamics.