Results from a National Survey of Employees by the AARP Public Policy Institute addresses employer-based solutions that may have great potential to help people save for the unexpected.
The “Saving at Work for a Rainy Day” report indicated that seven in ten employees would likely participate in an employer-based rainy-day savings program. Saving more and reducing financial stress are the top reasons employees would participate. The most common reason for not participating is that employees already save on their own, according to the survey.
The Rainy Day Savings Program was explained as an employee-specified amount of money to be deducted from each paycheck and deposited into a special savings account. The employee is free to take the money out of the savings account at any time without paying a penalty. There are no fees and the account information is private.
This type of program is similar to a sidecar savings account.
The most powerful drivers of likelihood to participate in an employer-based rainy day savings program are:
-Non-retirement savings. Employees with lower balances in non-retirement accounts are more likely to say they would enroll in a payroll-deduction rainy day savings program.
-Stress about overall financial satisfaction. Employees with higher levels of self-reported stress about their finances are more likely to participate.
-Trust in primary employer. The more employees trust their employer, the more likely they are to participate.
-Ability to pay for an unexpected expense costing one month of household income. Employees that considered this a major problem are more likely to participate.
The full report is here.