Americans aren’t the best at saving money for emergencies. Research has shown only about half of people could come up with $400 for a car or home repair, medical incident or other sudden expense.
And unfortunately, without emergency funds, financial issues tend to snowball. For some, saving in a 401k might take a backseat to paying off credit cards or outstanding bills. Others might even withdraw money from their retirement account or borrow against their 401k to cover unexpected expenses. All of this can pose a threat to one’s retirement outlook.
The good news is that Americans apparently want to save and are open to getting help from their employers, according to a new study.
In a survey of over 2,600 U.S. employees, AARP found seven in 10 would be interested in a payroll-deducted savings account if their company offered one.
Respondents said they’d likely allow a portion of their pay to be deposited into such an account in order to save more money and reduce financial stress.
Among the employees who weren’t interested, most were already saving on their own.
Other trends among those willing to participate included:
- Non-retirement savings. Those with little saved in non-retirement accounts were more likely to likely to enroll.
- Financial stress. Those who feel more financially stressed were more likely to participate.
- Trust. The more one believed their employer does what’s right for employees, the more apt they were to enroll.
- Unexpected expenses. Those who thought paying for an unplanned expense could be a major problem were more likely to participate.
Interestingly, AARP found employees’ age, marital status, education level, household income and 401k or other retirement account balances had little to no effect on one’s likelihood to enroll in a payroll-deducted savings program.
Data suggest offering an employer match is a near-surefire way to boost employee participation in this type of program. If their company matched at least some of the amount they were saving, almost nine in 10 respondents would be likely to use this benefit. Most (60 percent) would want the match deposited into the same savings vehicle, while a lesser number (26 percent) would prefer the match be directed toward their 401k.
Additional features that are important to would-be savers include the ability to immediately access funds, the option to change or stop contributing anytime and the possibility to keep the account if changing jobs.
Jessa Claeys is a writer, editor and graphic designer.
