Savings Bonds' Swan Song?

Current buyers of Series I bonds won't earn any more than the inflation rate over the bonds' 30-year life. (Associated Press)

Since that announcement, the date for eliminating paper bonds has been delayed. When -- and if -- it arrives, some buyers will move to the Web, but sales to small savers will still decline, probably a lot. Currently, 92 percent of savings bonds are purchased as paper securities.

Like most banking institutions, the government -- or at least the recent Congresses and the Treasury -- can't be bothered with the little guy.

But little guys need and want to save. Historically, that was the other purpose of savings bonds, along with raising money for the government. Peter Tufano, a professor at Harvard Business School, together with the nonprofit Doorways to Dreams Fund is studying whether that purpose can be revived.

Tufano proposes that people be offered a chance to buy Series I bonds with part of their income-tax refunds. He's been testing this idea over three tax-filing seasons at a handful of offices of the tax preparer H&R Block and the IRS-funded Volunteer Income Tax Assistance Program. Selected taxpayers due a refund of more than a certain amount were asked whether they would like to participate.

Anywhere from 4.5 to 9 percent of the taxpayers said yes, depending on the study. In the 2008 filing-season test, 64 percent of the buyers had no other savings or investments. Of those with savings, more than half had a balance of $1,000 or less. They put an average of $186 into the bonds. If they bought in the previous year, they were more apt to buy again.

These savers were also trying to help others -- 68 percent of them put co-owners on the bonds, primarily children.

Tufano was in Washington recently, presenting his findings to the Treasury. He's hoping to interest the government in backing a tax-time "RefundSaver" program, to give lower earners a way to capitalize on their thrift.

To achieve this, of course, a simple and convenient savings bond program has to exist. At the moment, the winds are blowing the other way.

Jane Bryant Quinn, author of "Smart and Simple Financial Strategies for Busy People," is a Bloomberg News columnist.