Real Savings +

Lewis Mandell, Pamela Perun, Lisa Mensah, and Raymond O'Mara III
December 17, 2009

In this paper, the Initiative on Financial Security at the Aspen Institute proposes an investment option for the Automatic IRA: Real Savings+ (RS+). RS+ combines two widely traded and highly liquid assets – Treasury Inflation Protected Securities (TIPS) and a broad-based equity market index – to provide savers with a personalized, automatic target date investment option. RS+ ensures the preservation of the purchasing power of contributions while at the same time offering the significant – and important – upside potential of market participation. RS+ thus provides low- and moderate-income savers with the opportunity for both growth and safety for their savings. Through an automatic, inexpensive blend of TIPS and the market index, RS+ protects all savers from the three most likely risks to retirement income – inflation, default by the bond issuer, and falling stock prices. By design, RS+ fully protects every dollar saved against economic cycles, market declines and loss of purchasing power.