U.S. Sens. Todd Young (R-IN) and Cory Booker (D-NJ) recently introduced the Emergency Savings Act of 2022, which seeks to help Americans save for unexpected expenses without gaining access to their retirement accounts.
The legislation would facilitate convenient and affordable access to workplace emergency savings accounts, improve financial security and reduce retirement savings leakage.
“We can’t always predict the future, and too many Hoosier families encounter situations where they struggle to cover unexpected expenses through no fault of their own,” Young said. “Unfortunately, this can cause families to dip into their retirement savings, which harms their financial future. Our bipartisan bill would help families create stable emergency savings for unforeseen expenses while keeping retirement accounts intact for the future.”
The lawmakers cited a Federal Reserve report determining almost half of Americans would struggle to cover an unexpected $400 expense and referenced a recent study revealing in the past year, almost 60 percent of retirement account participants who lack emergency savings tapped into their long-term retirement savings, compared to only 9 percent of those who had at least a month of emergency savings on hand.
“We know that many Americans are struggling to make ends meet, and that even a small, unexpected expense or emergency can send families into a financial spiral that puts them even further behind,” Booker said. “At the same time, for many of these workers, retirement is becoming out of reach. I’m proud to work with Sen. Young to address these savings crises by creating opportunities for workers to build savings for short-term, unexpected costs while also putting them on a pathway for a more financially secure retirement.”