Senators Young and Booker Introduce Bipartisan Bill to Help Americans Build Savings for the Future
On Wednesday, Senators Todd Young and Cory Booker (D-N.J.) introduced the Emergency Savings Act of 2022 to help Americans save for unexpected expenses without having to tap into their retirement accounts. The bill would facilitate convenient and affordable access to workplace emergency savings accounts, improving financial security and reducing retirement savings leakage.
According to a report by the Federal Reserve, almost half of Americans would struggle to cover an unexpected $400 expense. A recent study found that, 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 nine percent of those who had at least a month of emergency savings on hand.
The Emergency Savings Account Act of 2022 builds upon work by Senators Young and Booker to develop this concept over the last several years, including the Strengthening Financial Security Through Short-Term Savings Accounts Act of 2021.
“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. 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,” said Senator Young.
“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. At the same time, for many of these workers, retirement is becoming out of reach,” said Senator Booker. “I’m proud to work with Senator 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. Building on our past work, this bill will allow employers to offer workplace savings accounts that will make it easier to save, promote financial stability, and help workers build their retirement funds.”
Separating emergency savings from one’s retirement savings account will provide participants a better understanding that one account is for short-term emergency needs and the other is for long-term retirement savings, thus empowering employees to handle unexpected financial shocks without jeopardizing their long-term financial security in retirement through emergency hardship withdrawals.