We know saving money is important. But a growing body of evidence puts a finer point on what kind of savings matter most, and what it takes to build and maintain them.
Combining savings research from the past few years with data from the economic shock of the COVID-19 pandemic, we now know that liquid savings play a key role in financial security outcomes for families. Recent research shows that families, regardless of income, with liquid savings prior to the COVID-19 pandemic were in a better position to withstand the economic impacts of the crisis. And that having liquid savings is critical to building and maintaining retirement savings. But research also reveals that people cannot build and replenish liquid savings without both reliably positive cash flow and simple, affordable products and platforms that make it easy to set money aside.
These findings have broad implications for policymakers and financial services providers. As the pandemic revealed, the longstanding disparities in savings access and outcomes are dangerous: less than half of Black, Latino, low-income, or renter households were able to save in the year prior to the pandemic. These were the households most likely to lose income in 2020 and therefore most in need of a liquid savings buffer. In response to this historic household financial security crisis, the American Rescue Plan of 2021 provided stimulus checks and implemented federal anti-poverty measures which were aimed at stabilizing household cash flow. This additional cash flow puts saving within reach of more households than ever before – but only if everyone has easy access to high-quality, affordable savings tools that help people in America save for now and for later.
Join the Aspen Institute Financial Security Program on June 16 for a digital summit to explore the latest research about how savings function, why so many US families have been unable to build them, and what leaders including federal and state policymakers, State Treasurers, employers, recordkeepers, and retirement plan providers can do to accelerate the development of a truly inclusive savings system.
Attendees will receive:
- New insights on what it really takes to build savings and who currently lacks access to critical tools and resources.
- The latest research on which savings solutions work, and why.
- A new Framework for Action with policy options for state and federal policymakers to enable work-based emergency savings.
- Perspectives from key government and private sector leaders working to make savings and financial cushions a reality for all.
Read More Now:
- The Cycle of Savings: What We Gain When We Understand Savings as a Dynamic Process
- The State of Financial Security 2020: A Framework for Recovery and Resilience
- The COVID-19 Pandemic, Retirement Savings, and the Financial Security of American Households, a joint research project from the Aspen Institute Financial Security Program, DCIIA, Morningstar, and NORC at the University of Chicago
- Eight Truths about Savings and Four Principles for Inclusion: From 2015 to COVID-19