Amid workers’ growing concerns about being able to save money, an increasing number of employers are rolling out additional benefits, but human resources departments are still struggling to manage the various stressors of employees, according to HR experts and research from investment firm Edward Jones.
A recent Edward Jones survey found many Americans lack sufficient emergency savings despite prioritizing financial wellness. Although 93% of Americans said financial wellness is a priority, 43% of respondents said they do not feel financially stable. When it comes to emergency savings, 28% reported feelings of stress, 25% felt concerned and 25% said they were anxious.
“Understandably, inflation and market conditions are forcing consumers to spend more on necessities, like groceries and housing, so their savings are falling on the priority list,” said Meagan Dow, a senior strategist at Edward Jones, in the report. “When we get overwhelmed, it’s easy to put off thinking about things like saving for emergencies, paying down debt, or saving for retirement.”
Emergency saving programs, as offered by employers, have been a trending topic since the COVID-19 pandemic, with the recent SECURE 2.0 Act of 2022 including the opportunity for organizations to set up sidecar accounts or utilize retirement accounts for emergency savings by 2024. Last month, Delta Airlines and Fidelity Investments announced a team-up to offer Delta employees an emergency savings program that includes an employer match, similar to a 401(k) savings match.
Americans should have between three and six months of living expenses in an emergency savings fund, according to the Edward Jones researchers. However, only 38% of the more than 2,200 Americans surveyed in early January said their emergency savings fund is fully funded. Another 37% of individuals said they do not expect their emergency savings fund to last one month. More than one-quarter of respondents, 29%, reported they have less than $500 in their emergency savings.
Tom Kelly, a principal and the voluntary benefits leader in the health practice for Buck Global LLC, a consulting company, said employers are responding to Americans’ growing concern about emergency savings.
According to Kelly, about 25% of companies offer some form of emergency savings, and another 25% of companies plan to offer an emergency savings option in the future.
“For a lot of years, financial well-being for organizations has been focused on readiness and long-term savings,” Kelly says. “They’re now seeing their workers and workforce dealing with a number of short-term financial stressors, and I would say their attention is shifted to: How do you help those employees living paycheck-to-paycheck?”
Kelly says one of the key areas is to help them save for emergencies. He believes Secure 2.0 will continue to increase the visibility of emergency savings. However, there remain many stressors for the average worker, according to Kelly.
“I think HR leaders are struggling: How do you address all of these?” Kelly says. “Whether it be mental health or caregiving, remote workers—they have a number of priorities that they deal with every single day. For HR leaders, it’s an area of focus: How do they begin to address some of these and put more meaningful solutions in place?”
Kelly says some organizations offer lifestyle spending accounts, through which employees can customize a suite of well-being benefits, including emergency savings as a subsidy. Employees can “pick and choose in areas that they see fit to kind of support a variety of well-being needs.”
Looking to the future, he thinks the concern over emergency savings is making a difference. “I think where organizations have rolled [benefits of emergency savings] out, we’re seeing really good adoption rates,” Kelly says. “It can be as high as 50% of employees adopting an emergency savings program.”
Kelly has seen an average emergency savings of about $100 per month, and employees are more apt to redeem those balances over time.
“Emergency savings make it easy for employees with things like payroll deduction and the ability to sign up for these programmers,” he says. “All of those factors will help more workers save for the rainy day.”