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When the Covid-19 pandemic hit, many Americans felt the financial shock of a sudden drop in income.
If the same kind of event were to happen today, many people would still be struggling financially, according to a poll by the Bipartisan Policy Center, the Funding Our Future coalition and Morning Consult.
Additionally, government-provided palliatives — namely stimulus checks and monthly child tax credit payments — are no longer available to help reduce financial distress.
But one solution – emergency savings plans provided by employers – could help, according to the report.
How Americans Struggle
The survey found that 42% of employed Americans feel very or somewhat financially insecure. In addition, 24% have no savings set aside for an emergency expense.
In particular, the survey does not take into account the 40% of unemployed adults. If that were the case, the emergency savings gap would likely be even more pronounced.
A third of working adults say they would be very or somewhat uncomfortable with their ability to afford an emergency expense of $400. Additionally, 8% said they couldn’t afford it at all.
Meanwhile, 30% of Americans said they could cover a month or less of expenses if their income disappeared.
Those who are more likely to experience difficulties are parents, as well as workers whose income is less than $50,000.
Employed adults have struggled in the past 12 months to pay off their debts, which was cited by 47% of respondents. This is followed by paying utility and telecommunications bills, 46%; rent or mortgage, 44%; credit cards, 42%; food, 41%; transportation, 31%; clothing, 19%; recreational goods, 15%; student loans, 14%; child care or tuition, 9%; and others, 4%.
The online survey was conducted on February 10 and included 1,600 employed adults.
Emergency savings plans can help
About 14% of workers have borrowed or withdrawn money from their retirement accounts in the past year, according to the survey.
If employers offered another perk — emergency savings accounts — it could help employees build a financial reserve and prevent them from dipping into their long-term investments.
Like pension plans, emergency savings accounts would be tied to payroll. Workers could choose to set aside an after-tax portion of their wages toward their emergency savings funds. In the event of an unexpected event, they could access the money without penalty.
The survey revealed that 60% of employed adults would be interested in this option.
Currently, only 21% of workers say their employer offers an emergency savings account at work.
According to the research, interest in these potential benefits is particularly high among young black and Hispanic workers, as well as parents.
In fact, the Building Financial Security Through Short-Term Savings Accounts Act that was introduced by Sen. Cory Booker, DN.J., last year would address this issue. However, it is unclear if the proposal will go ahead.