Workplace Emergency Savings Accounts Reach 22 Million Americans, Spur $3.5 Million in New 401(k) Contributions
Updated
Updated · USA TODAY · Jun 23
Workplace Emergency Savings Accounts Reach 22 Million Americans, Spur $3.5 Million in New 401(k) Contributions
3 articles · Updated · USA TODAY · Jun 23
Summary
A new report found emergency savings accounts did more than build cash buffers: 20% of participants who had not been saving for retirement later started contributing to a 401(k).
Among workers who opened the accounts, more than 52% began retirement saving within four months, generating an estimated $3.5 million in additional retirement contributions by 2025.
The accounts let employees divert part of each paycheck into a dedicated emergency fund for costs such as car repairs or medical bills, a response to evidence many Americans could not cover a $400 surprise expense.
About 22 million Americans are eligible through employers including Delta Air Lines, AutoNation, Best Buy and Starbucks, and backers say the funds are meant to be used and replenished rather than left untouched.
That model has gained traction as inflation strains household budgets, with one provider reporting savers recently tapped the accounts to cover transportation costs pushed up by the Iran war.