According to LIMRA research, 14% of consumers say they have lost their job due to COVID-19 and 32% are earning less because their hours or pay were reduced. Almost half (45%) of workers indicate the pandemic’s economic downturn has negatively affected their retirement savings and 56% are worried about the long- term impact the pandemic will have on their financial security. The pandemic, however, is just exacerbating a problem that already existed. Almost 1 in 4 Americans have no money set aside for emergencies and another 26% have less than three months of emergency savings. But, according to LIMRA, more employers are interested in offering emergency saving vehicles. Nearly two-thirds of employers are somewhat or very interested in offering employees access to an emergency savings account. Also, 3 in 10 defined contribution (DC) plan advisors would like to see record keepers offer workplace emergency savings alongside retirement plan record keeping.

There are a few different approaches to the emergency savings gap:

Use an in-plan option. This approach supplements an existing workplace retirement plan, and it is intended to prevent employees from dipping into their actual retirement savings. Employees designate a percentage of their paycheck towards an emergency savings account within their DC plan.

Add a “sidecar” solution. Employers offer a program separate from their DC plan to enable their workers to save for emergencies.

Take it online. There are apps — like Twine, Acorns and Qaptial — specifically built to help consumers improve their savings habits.

Turn to insurance. One less formal (and also likely not well-known) option is to tap into a whole life policy. For people who own this product and have a cash balance, they are able to access those funds during difficult financial circumstances.

The good news is LIMRA research finds more than 6 in 10 workers are interested in a workplace emergency savings account. Innovation in this area can help create more stability today and a more certain tomorrow for employers, their employees, and families across America.