Data from the Federal Reserve and the IRS reveals that workers respond to income shocks and other events by withdrawing 30–40 cents of every dollar they've put into a retirement account before they ever get to retirement. (Photo: Shutterstock)
Some employees are actually getting help from their bosses in setting up rainy-day funds—thanks to employer concerns about productivity levels and workers' inability to retire.
That's according to a report in the Wall Street Journal that highlights the efforts of companies such as Levi Strauss & Co., Kroger Co. and SunTrust Banks Inc. to help employees find a way out of the financial morass many are in.
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How are they doing this? Sometimes by pushing accounts for emergency funds, sometimes through cash contributions or other incentives, and by deductions from paychecks into 401(k)-related accounts that serve as rainy-day funds.
"There is a growing recognition on the part of employers that people cannot save for retirement if they don't also save for emergencies and figure out a way to pay down debt," Ida Rademacher, executive director of the Aspen Institute's Financial Security Program, says in the report.
In fact, back in February, BlackRock said it would sink $50 million into an effort by nonprofits, companies and academics to devise programs that would help people dig themselves out from whatever financial holes plague them.
And the Senate in April, in a bipartisan effort, tackled a bill to help employers automatically enroll their workers into emergency savings accounts.
Data from the Federal Reserve and the IRS reveals that workers respond to income shocks and other events by withdrawing 30–40 cents of every dollar they've put into a retirement account before they ever get to retirement.
Between the threat that presents to retirement, and the stress workers are under from financial woes, businesses increasingly realize that people need help with their finances to do better at work and actually to get to retirement with enough funds to leave the job.
For instance, University of Pittsburgh researchers found in 2018 that truckers weighed down by financial woes were not only more distracted, they had more accidents; at one company, such stress increased total annual accidents by approximately eight.
The need for emergency funds isn't just among those with low incomes, according to the report, but hits from low to high. The JPMorgan Chase Institute found that median-income households saw their expenses fluctuate by nearly $1,300 per month. And Pew Charitable Trusts found in 2015 that unexpected expenses for such "surprises" as home repairs or hospitalization totaled a median of $2,000.
Workers at companies offering financial assistance for emergency funds are often cushioned for the first time from unexpected expenses, and the financial education that can come along with such contributions helps them better understand their financial situation and ways to cope with it.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.