Employees are stressed about their savings — an ESA can help

• Key Insight: Learn how employer-sponsored standalone emergency savings accounts are altering benefits strategy.
• What's at Stake: Employers risk talent retention and productivity if short-term financial needs remain unaddressed.
• Supporting Data: 63% of employees can't cover a $500 emergency expense.
• Source: Bullets generated by AI with editorial review

Most workers are unprepared for even the smallest financial setback, whether it's a flat tire or an unexpected medical bill — but offering emergency savings as an employee benefit can bring much needed reprieve. 

Sixty-three percent of employees are unable to cover a $500 emergency expense, according to a recent report from financial startup SecureSave, proving that employees are still struggling to make ends meet. As a result, demand for emergency savings programs and benefits has skyrocketed, with 90% of employees saying they want an employer-matched emergency savings account (ESA) and 40% saying they would prefer them over a 401(k) plan.  

"From the pandemic, to inflation, to tariffs, it's hard to imagine another five-year period where employees experienced so many changes at once," says Devin Miller, CEO of SecureSave. "People are trying to navigate dynamics that are unfamiliar and very challenging, making them more focused on short-term goals and impacting where employers should be spending time and money when it comes to their benefits." 

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The origin of ESAs can be tied back to the Secure 2.0 Act, according to Miller, which allowed employers to offer pension-linked emergency savings accounts and by limited penalty-free emergency withdrawals from retirement plans. Employees could also take one emergency withdrawal of up to $1,000 a year from retirement savings without the typical fee as long as they paid it back within three years. While helpful, this system can be complicated for benefit leaders to manage. It also leaves out workers without retirement benefits and risks that the withdrawal limitations won't be enough to cover the needs of employees who do.  

"Secure 2.0 put emergency savings much more prominently on the map, but it was a confusing map," Miller says. "Leaders knew there was increased attention towards the topic of ESAs, but they didn't know how they looked outside of retirement benefits or how to make them work." 

In response, SecureSave is focused on helping organizations set up standalone ESA programs, which function more like a banking product and aren't tied to a company's retirement plan at all. This means that any employer can offer them to any worker regardless of role type or access to benefits. Previously, this kind of benefit was predominantly adopted by small businesses that didn't have the means to offer retirement plans in the first place, but now larger businesses are seeing the potential, Miller says.   

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"Employers are becoming much more educated and therefore more aware of the state of their employees," Miller says. "We're already starting to see those larger, more sophisticated employers catch up and join the trend. As for those that have already deployed some kind of system, they're reporting really great results across retirement readiness, productivity and retention." 

Getting your ESA program off the ground

There are already a few iterations of out-of-plan ESAs on the market, according to Miller. However, many of these plans rely on referrals to banks or credit unions so employees can set up a kind of high-yield savings account, which can be a lengthy process that keeps employees from adopting it. Instead, SecureSave urges organizations to invest in their own program that pulls the funds directly from payroll, much like a 401(k) or other retirement contributions. Having their own program also allows employers to be as flexible with incentives as they want to be, from offering a generic employer match for everyone, to targeting certain demographics specifically. 

"If [employers are] trying to drive retention or trying to get people to certain milestones, they can design their plans with signing and milestone bonuses," Miller says as an example. "By offering more focused incentives, employers gain more control over the outcomes. " 

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Leaders looking to implement an ESA program should also be eliminating as many barriers to financial literacy as possible and pairing their efforts with learning opportunities and resources, Miller adds. The key to utilization is to make participation in these benefits an easy and obvious choice for employees, which can only be achieved through education. 

"Our approach is to help organizations get as many people enrolled in these programs as possible," he says. "Once they do, they'll have employees who are much more engaged in financial wellness and who will be much more successful in achieving it."