Research Reveals Access to ESAs Does Not Match Interest

Building savings is a top priority for low-to-middle-income workers, but not all have access to the type of savings that help them in their most dire moments, according to recent research from Commonwealth, a nonprofit focused on building financial security.

In March, Commonwealth fielded a survey of more than 2,000 employees earning total household incomes less than $80,000 per year, what the organization defines as low-to-middle-income workers.

When asked to select up to three supplemental benefits they believed would be of most value to them, 25% of respondents chose emergency savings accounts. ESAs ranked third overall, only behind sick/medical leave (39%) and vacation (38%). However, only 9% of respondents reported having access to the prized employer-sponsored emergency savings benefit, equating to a 16-percentage-point gap between interest and access.

“The presence of an emergency savings buffer is important because this protection from short-term uncertainty is a key precursor to comfort with making larger and more consistent deposits to long-term retirement savings,” the report stated.

Nick Maynard, Commonwealth’s senior vice president, says that while retirement savings topped the list of financial priorities for LMI earners—as 44% selected it as one of their top three—only about 52% said they participated in their workplace retirement programs.

“So there’s still work … to be done related to what the barriers [to participation] might be, and potentially [related to] what additional workplace savings priorities … these workers [may] engage in [first],” Maynard says.

What Employees Want

Employees without emergency savings accounts are twice as likely to tap their retirement funds in times of need, according to Fidelity’s “The Hidden Cost of Employee Financial Stress,” published November 5.

In 2024, roughly 5% of employees took a hardship withdrawal from their retirement account, compared with roughly 2% in 2018, according to Fidelity’s report. The rate of employees taking loans also increased, to 9.2% in 2024, up from 6.5% in 2021.

Fidelity found that 80% of employees without an ESA said they believe having one is appealing. The respondents told Fidelity that features they rated as “very” or “extremely” important for their participation in an emergency savings program are as follows:

• Low account minimums and low fees;
• Competitive interest rates;
• Simple enrollment;
• Easy access to savings in the account; and
• Great customer service.

The firm found that people enrolled in its Goal Booster emergency savings account took smaller hardship withdrawals than employees who had access to, but were not saving with, Goal Booster. Employees with workplace retirement account balances between $50,000 and $75,000 who used the ESA withdrew an average of $14,800, compared with an average $18,500 withdrawn by those with the same balance but without ESAs.

How Employers Benefit

Employees are not the only ones to benefit from ESAs, either. According to a report published by ESA provider SecureSave in October, “when employees save, they stay.”

When asked whether they were looking for a new job or planning to look for a new job in the next six months, 22% of those without a workplace ESA said they were actively looking, compared with 6% with an ESA who said the same. In addition, 79% of employees agreed that having access to an ESA made them feel “more positive” about their employer’s benefits.

Moreover, emergency savings are a top driver of financial well-being. According to Fidelity’s study, employees with at least three months of emergency savings had well-being scores twice as high as those without that level of savings.

The report also found that when employees are financially stressed, it has a major impact on their ability to focus at work: Lost productivity costs U.S. employers about $183 billion annually.

Katie Riley, the director of workplace thought leadership at Fidelity, says that aside from simply desiring access to ESAs, employees also want their employers to build a “communication plan” to educate them about the savings plans.

“One of the biggest gaps is in educating employees about how important emergency savings is and what that can mean for [their] short-term financial resilience, as well as their long-term financial goals,” Riley says. “The employer is a trusted … go-to source for financial information.”

While the ball is in the employer’s court, Riley cautions that positive results might not be realized overnight.

Emergency savings can take time to “build to the level an individual would want and need,” Riley says. “This is [still] a new product.”