A solid majority of working Americans report owning an emergency savings fund, according to Betterment at Work’s 2024 Retirement Readiness Report.
In the newly published 2024 survey, 63% of respondents report having an emergency fund. This marks a notable jump from the 52% measured in 2023.
Notably, ownership of an emergency savings fund was reported by 82% of those who say they are “very” or “somewhat” financially stable, compared with 25% for those with “moderate” to “significant” financial instability. Such findings show a correlation between feeling financially stable and having an emergency fund.
“Although more respondents report having emergency funds, 37% still do not,” the report warns. “As a result, many workers continue to dip into retirement accounts for unexpected expenses like car repairs, medical bills or living expenses when unemployed.”
The report suggests that a combination of market and policy factors seem to be driving more Americans to regularly set money aside for unexpected expenses. The Secure 2.0 Act legislation, for example, created new options for employers to establish paycheck deferral-based emergency savings programs that parallel traditional tax-deferred retirement plans. At the same time, volatile economic conditions and higher inflation seem to have inspired more Americans to rethink their monthly spending and saving habits.
Betterment’s report suggests that a focus on shorter-term savings should also help Americans prepare more successfully for retirement, as 401(k) plans and other retirement accounts have long served as a source of emergency cash — despite the early withdrawal penalties and fees that people face.
Betterment’s experts encourage both employers and financial professionals to help arm workers with best practices around emergency savings. This includes educating workers on key principles, such as how little money they really need in order to start an emergency fund.
“Even a small amount helps,” the report notes.
Where Emergency Funds Stand
Betterment’s survey shows that baby boomers are leading the emergency savings pack by a wide margin, with 76% of respondents in the generation reporting some level of emergency savings. This compares with 57% for Gen X, 66% of millennials and 58% of Gen Z respondents.
