Time to Update This ‘Evergreen’ Story on Emergency Savings and Retirement Securityby Dorianne Perrucci July 17, 2019
When the business news cycle slows down in the summer, there are plenty of “evergreen” personal finance stories that deserve your attention.
One such story is the lack of emergency savings faced by many American workers. The U.S. economy may be improving for many, but 39%, or nearly four in 10 American workers, still don’t have the money to cover an unexpected $400 expense, according to SHED, the 2019 Federal Reserve Board’s annual Survey of Household Economics and Decisionmaking, released on May 28, 2019.
But there’s more: Over one in five workers (22%) say money worries affects their productivity, according to a 2017 survey from benefits consultant Price Waterhouse Cooper. As reported in this blog in “New Ways to Save for an Emergency,” employers across the country are responding by offering, and even matching, innovative emergency-savings programs. Business reporters can look into one or more of the following angles to update this important story:
Why is there an emergency-savings crisis?
Because many Americans face a double whammy: stagnant wages and rising costs. A disproportionate number of black and Latino workers don’t have enough money to cover three months of expenses if they lose their job. Talk with staff at the Economic Policy Institute (EPI), a nonpartisan think tank that focuses on low- and middle-income workers. According to the Federal Reserve’s 2019 SHED survey of 11,316 consumers, 17% struggle with monthly bills without an unexpected expense.
Illustrate this story with one or more of the sobering graphics published in that survey, or develop your own. To connect this story with the U.S. retirement savings crisis, call Alicia Munnell at Boston College’s Center for Retirement Research, and find out the status of “leakage” in retirement accounts. In 2015, employees were withdrawing 30 to 40% of every dollar they saved in 401(k) accounts, which she predicted will lower retirement savings by 25% in 30 years. What’s the number now?
How are local companies responding?
SunTrust Banks Inc. and SafetyNet, a division of CUNA Mutual Group in Madison, Wisconsin have now been joined by Levi Strauss & Co., Home Depot Inc. and Kroger Co. SunTrust gives employees $1,000 if they finish a course and make automatic contributions, among other actions. Prudential Retirement began letting employees at 20 companies that use Prudential as a 401(k) administrator to fund emergency savings with after-tax payroll deductions. Are any of these companies in your zip code? Are any local companies developing similar programs?
Are there any personal stories to tell?
Find a reader or two who’s been successful at building emergency savings because of one of these programs and interview them. What challenges did they face in changing their behavior? Have a behavioral expert weigh in on the issue.