Two-Thirds of Americans Can't Cover a $400 Emergency. Here's How Your Employer Can Help

You may have an easier time building savings in the near term.

As a general rule, it's important to have enough money in a savings account to cover at least three months' worth of essential bills. The logic there is that you might lose your job unexpectedly, and if that happens, it could take some time to find a new one. Having enough savings to pay for three months of bills could help you avoid a scenario where you're forced to rack up costly credit card debt just to cover your essential costs, like rent, transportation, and food.

But unfortunately, many Americans don't have anywhere close to three months' worth of living expenses socked away in the bank. In fact, a recent Bloomberg article referencing a Suze Orman survey found that only one-third of Americans could cover a $400 emergency expense. This means that most Americans are clearly not in a position to get through a period of unemployment, or to cover a large unplanned bill like a major car or home repair.

The good news, though, is that a new rule allows employers to help workers save not just for retirement, but also, emergencies. And it has the potential to be a game-changer.

Employers can now help

It's common for employers to offer workers the option to sock money away for retirement in a 401(k) plan. But these plans are restrictive in that you generally can't touch your money until age 59 1/2.

Even if your 401(k) allows you to take out hardship withdrawals at a younger age, you might still face a 10% penalty for removing funds prior to age 59 1/2. And if you're in a dire enough position where you have to tap your retirement account, that's a hit you don't want to take.

But thanks to a new rule known as SECURE 2.0, employers can allow workers to set aside up to $2,500 a year in a non-retirement savings account. That $2,500 can serve as emergency savings -- money that can be accessed penalty-free at any age.

Just as importantly, that money will be taken out in the form of payroll deductions, which might help workers better stay on track with saving. Many people struggle to save because they spend their paychecks and then attempt to add to their savings at the end of the month, when there's little to no money left. This new provision makes it so that workers can have funds for emergency savings deducted from their earnings automatically, before they have a chance to spend down their paychecks.

A step in the right direction

Clearly, Americans have a long way to go on the road to building emergency savings. But the fact that employers can now play a more active role in that is definitely a positive thing.

Not only might this new provision make it easier for workers to build emergency savings, but it might also spare them from having to tap their retirement accounts to cover a surprise bill. And that could spare a lot of people a financial hardship later in life.