Savings Accounts and People with Disabilities: New Time Series Evidence

Background and Purpose:

The extent of financial fragility among U.S. households became evident following the Great Recession, as families struggled to make ends meet. In 2015, 46% of Americans reported not having enough money to pay an immediate $400 expense. While having a savings account can help buffer unexpected drops in income and mitigate financial fragility, the prevalence of savings account utilization among people with disabilities (PWDs) has been historically low due to increased poverty rates, extra costs of living, and eligibility rules for welfare programs. Congress attempted to address this in 2014 through the Achieving a Better Life Experience (ABLE) Act, which created special tax-advantaged savings accounts for PWDs. Because this program is relatively new, there has been little research on its efficacy. Therefore, the objective of this study is to determine whether there were any changes in the prevalence and slope for savings accounts before and after the introduction of the ABLE Act.

Methods

An interrupted time-series analysis was conducted using cross-sectional data from the National Financial Capability Study (2012, 2015, and 2018) to assess aggregate trends in savings account ownership before and after the ABLE Act. Because the target population of the ABLE Act was PWDs under the age of 24, PWDs between the ages of 18-24 served as the core analytic sample. Those over 24 were initially ineligible for ABLE accounts, so a cohort of PWDs between the ages of 25-34 was used as a comparison group. The outcome measure for this study was self-reported savings account ownership. Separate regression models for the target and comparison group were run to estimate prevalence ratios, and controlled for sex, race/ethnicity, household income, and education level.

Results

The analytic sample included 128 PWDs who were surveyed between 2012 to 2018. The comparison group was 338 PWDs. Unadjusted prevalence rates for savings accounts among the target group was highest in 2012 at 36% and lowest in 2015 at 27%. After the ABLE Act was passed, the prevalence rates for savings account ownership within the target group increased to 35%. In the period immediately preceding the ABLE Act (2012-2015), both the prevalence and slope for savings account ownership in the target population declined significantly (p < 0.05). There was no significant change in the comparison group for this period. During the period immediately following the ABLE Act (2015-2018), those in the target group experienced significant increases (p < 0.01) in the prevalence and slope of savings account ownership, while those in the comparison group showed a significant decline (p < .005).

Conclusions and Implications

Results suggest prevalence rates for savings accounts among PWDs significantly increased following the ABLE Act of 2014, though the magnitude of this change was relatively small. Furthermore, savings accounts among the comparison group declined significantly, which could point to early programmatic success. These results should be viewed in light of the study’s limitations, like the use of cross-sectional data. Randomized control trials are needed in future research.