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What Are Workplace Emergency Savings Accounts (ESAs)?
Supporting employee well-being is more important than ever, and employers are looking for benefits that deliver real impact without high costs. In today’s challenging economic climate, helping employees build financial resilience is one of the most effective ways to reduce stress and improve workplace performance. That’s why emergency savings programs are gaining traction. They reduce financial stress while delivering measurable ROI to employers.
A workplace Emergency Savings Account (ESA) is an employer-sponsored savings benefit that helps employees automatically set aside money from their paycheck for unexpected expenses. An ESA is an easy, low-cost financial wellness solution that reduces financial stress and boosts employee well-being. It can be implemented any time of year with minimal HR involvement.
However, not all ESAs are created equal. From flexibility and ease of access to employer contributions, it’s essential to choose an emergency savings program that meets your organization’s needs.
In this blog, we take a deep dive into the world of emergency savings, exploring why they matter more than ever and highlighting the elements that combine to create a high-quality employer-sponsored program.
What Is a Workplace Emergency Savings Account?
A workplace Emergency Savings Account (ESA) is a dedicated savings account designed just for emergencies offered through an employer. Increasingly desirable as a financial wellness benefit, ESAs are designed to help employees build accessible funds for short-term, unexpected expenses – medical bills or urgent home repairs, for example. By providing immediate financial support, employees with an ESA are significantly less likely to take on debt, use credit cards, or tap into their 401(k) during a financial emergency. In fact, employees with an ESA are 50% less likely to withdraw from a retirement fund.
With the most successful ESA programs, employees contribute to their ESA via automatic payroll deductions. This makes it easy to build savings gradually yet consistently. Contributions are separate from retirement or pension savings, ensuring that funds are accessible while helping employees leave retirement savings untouched. Many employers choose to enhance ESAs by offering incentives – such as matching contributions or signup bonuses – to encourage participation.
By removing barriers to saving and helping employees plan for the unexpected, ESAs are becoming a coveted component of workplace financial wellbeing strategies.
Why ESAs Matter More Than Ever
In the current volatile financial landscape, ESAs are increasingly desirable and important. According to a recent survey, over 1 in 5 Americans have no emergency savings while 37% can’t afford an unexpected expense of over $400 without borrowing or cutting back elsewhere. Credit card debt hit a record high of $1.17tn in the third quarter of 2024 while a growing number of Americans – 4.8% in 2024 up from 3.6% in 2023 – are making hardship withdrawals from 401(k) plans to deal with financial emergencies.
The impact of this financial strain goes beyond statistics. It affects employee well-being and productivity, which in turn directly impacts a company’s bottom line. A recent SecureSave survey found that 40% of participants said financial stress caused them to miss work. Yet rather than ask their employers for help, employees are more likely to start looking for a job elsewhere, negatively impacting workforce retention levels.
ESAs offer a proactive solution to this conundrum. In fact, a recent report from Vanguard stated, “Having just $2,000 in savings can provide a critical buffer, reducing the likelihood of financial distress and enhancing overall well-being.” By making it easier for employees to build savings, ESAs provide a crucial buffer against financial emergencies and unexpected expenses. And importantly, they work alongside – and not in competition with – retirement plans. Supporting short-term financial stability helps employees avoid dipping into their 401(k) plans, protecting their peace of mind as well as their long-term financial future.
And the numbers are compelling. Employees with an ESA are more likely to be focused at work and less likely to leave their job.
What Makes a High-Quality ESA?
How do you ensure that you select an employer-sponsored saving program that will deliver the best results for your organization and workforce?
It’s important to look for an Emergency Savings Account (ESA) that makes your employees feel more secure – and one that’s easy, automatic, and rewarding.
It’s important to look for key features, such as:
Features like automatic enrollment and payroll deductions make it easy for employees to build savings without extra effort. This helps them develop a lasting habit that can improve savings across other areas of their lives. Programs with no fees and penalty-free access to funds offer peace of mind when unexpected expenses come up. And keep in mind that employer incentives, such as matching contributions or bonuses for consistent saving, significantly boost ESA participation.
Ideally, choose a solution that integrates seamlessly with your existing payroll solution. This makes the program easier to manage, improves the employee experience, and strengthens your overall financial wellness strategy.
Most importantly, a high-quality ESA will have a track record of strong adoption and sustained engagement rates, indicating that employees understand its value and are actively using it. By focusing on these elements, employers can create an emergency savings solution that supports financial resilience.
Final Thoughts
Simple and cost-effective yet incredibly powerful, Emergency Savings Accounts (ESAs) are a high-impact benefit that help employees build financial resilience and reduce stress. A high-quality ESA significantly boosts employee well-being – and when employees feel secure, businesses benefit from improved engagement, productivity and retention.
SecureSave is a low-cost, easy-to-implement solution with an average adoption rate of 60%, making it the highest-impact employer-sponsored ESA available. Ready to learn about how we partner with you to improve financial well-being at your organization? Get in touch.
