The survey results indicate the need for an employer-offered emergency savings fund
OAK BROOK, Ill., July 10, 2024 (Newswire.com)
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Inspira Financial, a leading provider of health, wealth, retirement, and benefits solutions, today released the results of a survey of more than 1,000 employed Americans. The report uncovers why employees need support for their financial wellness and how employers and emergency savings funds (ESFs) can help address those needs. One key finding from the report reveals that 79% of employees surveyed want more savings opportunities, and 70% prioritize “rainy day funds.”
The new report, “Emergency savings funds: Empowering employees to be financially resilient,” is the second report in a two-part series by Inspira on ESFs. The report indicates that, despite strong U.S. economic performance and sustained consumer spending, consumer savings tell a different story. The personal savings rate declined to 3.6% in April 2024 (compared to 8.1% in August 2019) and accumulated savings have dwindled, especially among lower-income Americans. Employees are becoming increasingly nervous about their present and future financial health.
With these financial challenges, employees have started to expect more support from their employers. With only a quarter of employees saying that they are highly satisfied with their current benefits, employers are aware of the increased expectations and are looking at how they can improve their benefit offerings.
One solution the report points to is an employer-offered emergency savings solution — a workplace benefit that allows employees to set aside money for unexpected expenses and emergencies, an ESF, sometimes known as a “rainy day fund.” While employees can set up a personal savings account for emergency purposes, there are several advantages of enrolling through an employer, like automatic payroll deductions and potentially employer-matching contributions to help promote savings.
“It is troubling to hear that over half of those surveyed were stressed about not having enough money today and 64% were concerned about not having enough in the future. But, when a third of the people that we talked to said they have tapped into their 401(k) to cover emergency expenses, then we know something isn’t working,” said Becky Seefeldt, Vice President of Strategy for Inspira Financial. “Employees are demanding greater support for their holistic well-being from their employers, which includes financial wellness. An ESF can help alleviate the financial stress that too many employees are experiencing, positively impacting their physical and mental health, and helping them be more successful at work.”
According to a 2023 Morgan Stanley study, 66% of employees acknowledge that financial stress negatively affects both their work and personal lives. There is a clear need for financial support, especially from employers, because financial stress can lead to burnout, a reduction in productivity and engagement, and can negatively affect retention. The impact of an ESF can be significant: Inspira’s report shows that even employees with less than $100,000 in annual household income are willing to contribute an average of $148 a month to an ESF. If an employee saved that amount every month, they could build a rainy-day fund of more than $1,000 in less than seven months. Employers that offer contribution matching can further reduce their employees’ financial stress.
The survey further revealed that ESFs can positively impact an employer’s brand: 85% of those who have an ESF agree that the benefit contributed to a more favorable impression of their employer, and one-third of respondents ranked ESFs as their most desirable financial wellness benefit.
“An ESF is not a replacement for a health savings account or a 401(k) but is a supplemental account that can be added to a comprehensive benefits package,” Seefeldt said. “These accounts are emerging as an exceptional tool for employers to add to their benefits package. For employees, ESFs are perfect for building saving habits and can help improve their overall outlook toward their financial health, reducing stress and improving their well-being.”
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About Inspira Financial
Inspira Financial provides health, wealth, retirement, and benefits solutions that strengthen and simplify the health and wealth journey. With more than 7 million account holders holding over $62 billion in assets under custody, Inspira works with thousands of employers, plan sponsors, recordkeepers, TPAs, and other institutional partners — helping the people they care about plan, save, and invest for a brighter future. Inspira relentlessly pursues better outcomes for all with our automatic rollover services, health savings accounts, emergency savings funds, custody services, and more. Learn more at inspirafinancial.com.
Source: Inspira Financial
