Another factor that adds value for families in the upper part of the income scale is the extra benefit they get from tax deductions, deferrals and exclusions. When a family in the 10 percent bracket deducts or excludes a dollar, it saves a dime. When a family in the 33 or 35 percent bracket does the same, it saves 33 or 35 cents.
In effect, the government picks up the tab for about a third of the wealthy family's "ownership" ante, compared with 10 to 25 percent of it for a low- to moderate-income family.
Taxes later on may be correspondingly higher for the wealthy family, assuming its income remains high. But for the family that is having trouble meeting living expenses, the challenge arises at the beginning, not the end: The initial ante, subsidized though it may be, can be a stumbling block. There are just too many competing daily demands on their income.
In fact, many workers fail even to enroll in a 401(k) plan when it is offered, and employers are struggling to find strategies that will attract them.
Besides the pay-to-play aspect of the Ownership Society, there is the risk factor.
It has been noted that just as the move from a traditional pension to a 401(k) plan shifts the investment risk to the employee, so personal Social Security accounts would move risk to the worker. And, of course, 529 plans, Coverdells, even health savings accounts (see story, Page F1) may still involve risk.
But, like tax deductions, risk doesn't mean the same thing at all income levels. It may also be that lower-income workers, constrained by their own finances or government rules on the amount they can invest, will be forced to take more risk or face the certainty of seeing their ownership accounts fall short of their goals or needs.
Greater risk can produce greater reward, but it doesn't necessarily do so.
A study released last week by the Employee Benefit Research Institute in Washington found that 15 percent of retirees ages 64 to 74 lost half or more of their total wealth between 1992 and 2002, and 30 percent lost half or more of their financial wealth. On the other hand, more than half of the retirees sampled saw their total wealth rise by more than 50 percent during those years.
The study found that white men, married couples and the better educated did best at managing their wealth.
One of the major economic trends of the past decade in this country has been the widening gap between the well-to-do and the rest of society.
Advocates of the Ownership Society argue that these programs have the potential to improve this picture by enabling low- and moderate-income Americans to save and invest and build wealth as they never have before.
Clearly, that potential is there -- for some. The EBRI study found that every demographic group, including low-income people and non-whites, had members who were managing their wealth well. And the people studied did not have a lifetime to accumulate wealth in 401(k) or other personal savings and investment vehicles, which began to become widespread only about 20 years ago.
But will enough of today's workers take advantage of these various vehicles to make a real difference? Most families, if they are honest with themselves, would admit that they could save more. They could eliminate vacations, drive an old car, eat out less frequently or go to fewer movies. But for those who are not willing to do that -- if they find themselves in poverty in old age, will critics say that's what they deserve?
The better-off are already taking advantage of the benefits of ownership, and if they make full use of all the intergenerational strategies that are now allowed, today's parents may be able not only to ensure themselves of much greater wealth for their remaining years but also to lock in wealth's advantages for their children and grandchildren.
