3 Ways to Increase Emergency Savings Participation Without Undermining Retirement Saving

Devin Miller

For a growing share of U.S. workers, their financial stability is fragile and even a minor crisis can knock household budget plans off course. Once that happens, retirement contributions are often paused—or balances are tapped—because they may appear to be the most accessible source of cash.  

This growing challenge has a proven solution: emergency savings accounts that help workers withstand short-term shocks without sacrificing long-term retirement goals.

When money is saved automatically in small increments, employees are more likely to build a short-term financial cushion that can help absorb unexpected expenses. Developing this habit can, in turn, give workers the cash they need in a financial emergency and prevent a cycle where debt and retirement withdrawals are the only solution. 

This is increasingly crucial. Recent research from Goldman Sachs suggested that more young Americans are living paycheck-to-paycheck than ever before. For many, a single emergency can cascade into a series of financial hardships that entirely derail plans for long-term savings.

As a result, emergency savings accounts have become an increasingly attractive addition to benefits packages. The accounts are designed for real life: small, automatic payroll deposits into an ESA, with funds that are easily accessible when an unexpected expense comes up.

For plan sponsors exploring the opportunity to offer ESAs, there are several things to consider. The difference between a program that employees value and one they ignore usually comes down to program execution and technology. Even a well-designed plan that is poorly implemented can be poorly utilized and, worse, lead to employees not improving their savings outcomes.

Here are three practical steps benefits leaders can take to drive adoption of emergency savings:

1. Focus on Emergency Savings

Emergency savings programs become more effective and easier to deploy when employers lead with clear, purpose-driven language that helps employees understand that these accounts are designed to cover unexpected expenses and reinforce appropriate use. Recent research from AARP suggests that employees prefer benefits explicitly labeled as ‘emergency savings,’ and kept separate and distinct from retirement.

While employers might be wary of the introduction of another savings program that could potentially compete with retirement savings goals, recent research from the Aspen Institute Financial Security Program suggests that once employees adopt an ESA, they generally do not reduce their retirement savings to achieve ESA contributions.

In fact, many participants reported stable or increasing 401(k) contributions while also contributing to emergency savings. Still, employers should monitor deferral stability and indicators, such as 401(k) loans and hardship withdrawals, to assess the quality of their benefits package and to ensure that employees’ ESA balances align with outcomes the organization is tracking.

On the workforce side, employers can also track retention, absenteeism, and employee sentiment about benefits. These metrics provide common data points for finance, HR and total rewards teams.

2. Make Enrollment and Saving Feel Effortless

Workplace emergency saving presents an opportunity to tie savings seamlessly to payroll, and that’s when these types of programs tend to work best. The less the employee has to manage manually, the more likely the account is to grow. A strong starting point is enrollment.

Of course, incentives can be a primary driver of increased participation, especially when encouraging employees to take the first step. A modest employer contribution–for example, a one-time seed deposit, a match, or a small reward for enrolling or hitting an early savings milestone—can nudge employees to start saving and continue contributing long enough to feel the benefit of having a cushion.

Contribution design is another lever employers can influence through program setup and communications. Programs often perform better when the starting contribution amount is modest and framed around building a starter cushion. Employees tend to engage when the goal feels achievable and near-term, rather than another long-range savings mandate.

Even if an employer relies on a benefits partner to deliver the ESA experience, the plan sponsor still controls how the program is introduced, where employees can access it and how clearly it is explained. A short enrollment path, plain-language instructions and a clean handoff from the benefits portal to ESA enrollment can make a meaningful difference.

3. Make Access Simple and Predictable

Emergency savings programs are more effective if employees feel confident they can access the money when they need it. Clear, plain language about how to access funds, how long it takes, what steps are required, and whether any fees or restrictions apply can help simplify the experience. Uncertainty can slow adoption and lead employees to stop contributing. Even if the provider handles the withdrawal process, employers control the clarity of the message employees receive. A one-page “how it works” explainer, included in onboarding and open enrollment materials, can reduce confusion and employee hesitation.

Just as important, employees are more likely to enroll and stay enrolled when they hear consistent support and messaging from company leadership. A short launch message that explains why the benefit exists, paired with manager talking points and a simple FAQ, can be enough to normalize participation. After rollout, light-touch reminders throughout the year are necessary: Sponsors should keep the program top of mind and explain the opportunities available, without turning it into a burden or major lift for employees.

Making even a small improvement in how people save can have tremendously meaningful positive downstream effects, and the quality of implementation can be the tipping point. When considering ESA plans, remember that simplifying the setup process, setting clear expectations for access, and supporting the program with thoughtful communication can be the difference between employees postponing savings and building a cushion they can rely on.

Devin Miller is a co-founder and the head of SecureSave, a part of HSA Bank and a leading provider of employer-sponsored emergency savings accounts. HSA Bank is a division of Webster Bank N.A.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.