Most Americans don't have enough savings to cover unexpected expenses, tempting many to raid their workplace retirement savings plans. Using after-tax contributions in the retirement plan to build savings that can be accessed to cover emergencies could help. Research consistently shows that personal financial worries detract from employee engagement and productivity. And older workers who are not able to retire when they want can add to the cost and complexity of workforce management strategies. All this suggests that reimagining DC plans – and leveraging their success – provides a great opportunity to help employees save for emergencies. Employers may wish to consider supplementing their DC plan with a new emergency savings feature. This could help employees fortify their day-to-day financial health while simultaneously making it easier for them to reach their retirement goals.
Phil Waldeck, President, Prudential Retirement; Snezana Zlatar, Senior Vice President, Full Service Solutions Product & Business Management, Prudential Retirement
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