Utilizing a study from Commonwealth and SaverLife, Senators Todd Young (R-Ind.) and Cory Booker (D-NJ) introduced the Emergency Savings Account Act of 2022 with the goal to facilitate convenient and affordable access to workplace emergency savings accounts. This bill was included in the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act. On June 14, the Senate Committee on Health, Education, Labor and Pensions moved RISE & SHINE out of committee, including the emergency savings provision.
Commonwealth and SaverLife’s joint study found that nearly a third of individuals would be more likely to start contributing, or contribute more, to a retirement account if it was paired with an emergency savings option. Because of the low barrier to entry, emergency savings accounts are likely to expand savings for lower-income workers with access to 401(K) plans, and participation in such an account will potentially bolster not only their short-term financial stability, but also their long-term retirement savings.
Ensuring financial stability for all individuals and families is critical to the work we do at Commonwealth and SaverLife. We know from research with households living on low and moderate incomes that emergency expenses can impact a family’s finances significantly and that even a little bit of savings can have a big impact on an individual’s financial future. The Emergency Savings Account Act of 2022 is an important first step in ensuring financial security for some communities. However, half of Americans, including most people living with low incomes, don’t have access to an employer retirement plan and will not benefit from this legislation. We encourage Congress to go further to support the financial health and emergency savings needs of the millions of Americans living without access to retirement accounts.