Struggling To Build an Emergency Fund? These Employers Offer Plans Through Suze Orman’s SecureSave and Others. -- Yahoo Finance

Press Release from Financial Wellness Strategies

By: Yaёl Bizouati-Kennedy Mon, Jan 8, 2024   Having and building an emergency fund is a cornerstone of financial well-being, according to several experts.   An emergency fund is generally the equivalent of three to six months of living expenses. Having such assets may prevent debt or dipping into retirement savings, for example.   Yet, 27% of Americans say they’re in debt due to an emergency expense they couldn’t cover, according to a LendingTree survey. And among those who faced a financial emergency in the past six months, more than half (55%) took on debt because of it. A full 27% of respondents took on more than $5,000 in debt, the survey found. What’s more, the Federal Reserve’s Economic Well-Being of U.S. Households report found that a whopping 37% of Americans would not be able to cover $400 for an emergency.

Employers Begin To Offer Emergency Fund Plans

Against that backdrop, many employers are now taking notice and are offering emergency fund plans as part of their benefits.

For instance, several companies have been using programs such as Fidelity’s Goal Booster — which Starbucks, Delta and Whole Foods are using — or Suze Orman’s SecureSave.

So far, Fidelity has signed up 10 large employers who are live with payroll. Thousands of employers offer Goal Booster to employees, with their employees funding the account via a bank or credit union account instead of via paycheck, said Emily Kolle, VP of Fidelity‘s Goal Booster program.

Kolle noted the importance of having an emergency fund. Though, she stressed the fact that many Americans have struggled to maintain these types of savings, partly due to inflation, market volatility and the pandemic.

“According to recent Fidelity research, a lack of emergency savings has become a major source of stress for Americans, with 8-in-10 Fidelity participants saying inflation and the cost-of-living are causing them stress, and half saying it is causing them to be distracted at work,” said Kolle.

In turn, she added that employers are in a unique position to help address their employees’ short-term savings needs. Doing so may also help employees save more effectively for long-term goals, like retirement.

“Additionally, through Fidelity’s Goal Booster, employees can not only set up and manage their saving goal, but there is also an option for employers to integrate payroll, allowing employees to deposit money directly from their paycheck into their goal-based account,” she added.

Emergency Savings Means a Better, More Secure Retirement

According to Kolle, there are also significant financial wellness benefits associated with emergency savings. Employees who have access to short-term savings when they need it are more financially confident, have higher financial wellness scores and are more likely to be “on track” for retirement.

“Financially well employees are 10 times more likely to be focused at work than employees who are not financially well,” she said.

Why Are These Plans Beneficial to Employees?

Some experts said that with these kinds of accounts — those involving a third party — and especially if the employer is providing an incentive like matching funds, saving is more likely to take place.

“Let’s face it: Anyone can go to their bank and have $20 a week automatically moved into a separate account. There is nothing new there,” said Bobbi Rebell, CFP and founder of Financial Wellness Strategies. “The fact is, most of us don’t. We are busy and we plan to get to it when we get to it.”

According to her, the employer’s involvement puts it on the “now” agenda.

The other great thing, per Rebell, is that because a third party is involved, savings are just a little bit harder to access.

“If you have money saved just in a separate account, it is easy to just use that money for everyday expenses as needed. But if the money is kept out of your personal account, you have to make that extra step to access it from the third party,” she said.

Rebell also noted that, unfortunately, when people don’t have cash on hand for emergencies, they look to other avenues.

“Those other places almost always will have consequences, whether it is dipping into retirement savings and paying penalties, or putting it on a credit card and paying interest,” she said.

According to her, these emergency savings plans through the workplace are becoming more prevalent, alongside the awareness of the importance of financial wellness.

“Companies like Financial Wellness Strategies are emerging to help companies support their employees’ financial wellbeing and lower financial anxiety so they can be more present and productive at work,” she added.