Family Finances

Driving Retirement Innovation: Can Sidecar Accounts Meet Consumers’ Short- and Long-Term Financial Needs?

June 27, 2017  • David Mitchell & Gracie Lynne

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This brief explores the possibility of linking a short-term savings, or “sidecar,” account to a traditional retirement account to better meet consumers’ short and long-term financial needs. Such an innovation could help address families’ current inability to cope with financial shocks and volatility, as well as their over reliance on withdrawals from retirement accounts to fund current consumption. After describing these dual problems in depth, the brief will explore the advantages and disadvantages of various design approaches to implementing a sidecar account.