According to a study by the National Center for Policy Analysis the answer is often no — and it also depends on who you are. If you are young, single-parent, living in a lower-income household, than it may not pay off very much, according to the analysis presented in this report.

The authors of the report argue that low-income families have a high marginal tax rate on savings. For example, take CalWORKs which has an asset limit for eligibility of $2,000. If a single-parent with two children earning $1,000 per month, saves one dollar more than the asset limit, they would lose $292 in CalWORKs benefits. The immediate effective marginal tax rate for saving that $1 dollar over $1,999 is 2,920 percent!

So, what’s the incentive to save if your single and low-income? Not much.

The broader issue that this report highlights is the wide discrepancy between rhetoric and policy toward savings. On the one hand, we have government demanding that low-income families pull themselves out of poverty, and on the other hand, we have policies that actually penalize low-income families from saving what little resources they may have. And without savings and opportunities to built assets, low-income families have little chance of moving out of poverty for good.