Today, a bipartisan group of Senators introduced S. 3218, the Strengthening Financial Security Through Short-Term Savings Act. The bill would make it easier for employers to help their workers set up rainy day savings accounts alongside traditional retirement funds. The Aspen Institute Financial Security Program’s Executive Director Ida Rademacher released the following statement in response to today’s news:
“I commend Senators Heitkamp, Cotton, Booker, and Young for turning this promising idea into smart, carefully crafted legislation. By giving the green light for employers to automatically enroll their workers into short-term savings accounts, this bill has the potential to spur much-needed innovation, experimentation, and uptake – similar to what happened to employer-sponsored retirement accounts after the Pension Protection Act passed over a decade ago. Today’s working families need new tools to meet the unprecedented short- and long-term financial challenges they face. Sidecar rainy day savings may well do both – by building up an emergency fund while simultaneously reducing the need for premature withdrawals from retirement accounts.”
Aspen FSP first published on the sidecar idea in 2017 and later joined with Prosperity Now in calling on employers to consider offering such a benefit to their workers. Coverage of employer-sponsored emergency savings accounts has previously appeared in the New York Times and Wall Street Journal, among other publications, and a group of six scholars circulated an academic paper on the topic in October of last year. S. 3218 is one of four retirement-related bills introduced today by these Senators and was inspired in part by the Bipartisan Policy Center’s Retirement Commission report Securing Our Financial Future: Report on Retirement Security and Personal Savings.
For more information on the Aspen Institute Financial Security Program visit AspenFSP.org.