American workers need and want to build more emergency savings—and pioneering employers are now in a unique position to help them save.
One critical barrier to automatic emergency savings was a lack of clarity around employers’ ability to direct their employees’ earnings to a designated financial institution savings product. Now, with the CFPB CAST Template, employers can apply for approval to enable their employees to save more easily. Employers will be able to designate a financial institution and savings account even if the employee lacks or has not designated a savings account. Employees can also choose their own savings account or opt-out of the program.
Commonwealth is here to guide you through the process. Contact Jason Ewas at firstname.lastname@example.org to start the conversation and learn more.
The COVID-19 economic recession has exposed widespread financial insecurity in America, but the current crisis merely shines a light on longstanding issues. Before COVID-19, over a third of all Americans (37%) did not have the savings to handle an unplanned $400 expense—a percentage that climbs to 58% for households making under $60K, and much higher Black (71%) and women-led households (61%) at this income threshold.
“Autosave for Emergencies” (Autosave) now enables employers to help their employees weather financial shocks and setbacks by enabling them to save for emergencies automatically. Decades of research on 401(k) accounts has demonstrated that auto-enrollment and auto-contribution are effective methods for helping employees build savings for retirement. It is likely that it will help employees build emergency savings as well.