Employers Are Now Offering Emergency Savings Tools
As the recent partial government shutdown has demonstrated in stark relief, many American workers—in both the public and private sectors—are simply not prepared to weather a financial hardship.
So when faced with such a circumstance, many often tap their retirement accounts through loans, or else use credit cards or payday or other high-interest loans, Phil Waldeck, president of Prudential Retirement, recently told CNBC.
“If you don’t have that buffer,” Waldeck said, “it could be a time of enormous stress. And in that time of stress, often people will tap sources that are not ideal for them.”
Given this dearth of options, Prudential has begun offering employers a tool to help employees stash away money in the event of a financial crisis—like another shutdown. The new option for emergency savings is an after-tax contribution that allows employees to automatically put money away in low-cost investments such as money market or so-called stable value funds.