We all “put money aside for a rainy day” which can often be called “emergency savings”. Few people will say it doesn’t matter, especially for the past year.
COVID-19 has highlighted these needs – as more than half (53%) of Americans plan to make saving more for a possible emergency a priority in 2021 compared to 2020. But, as for the savings, the reality is that the financial demands of many people today compete with the financial results of their future. So, a popular question among those who are faced with competing priorities is, how do I find a way to save and where should I spend my next best dollar?
Finding the right support can play an important role in helping you achieve your goals and, increasingly, the answers can often be found with your employer. Here are some common challenges and areas in which to seek help.
Health savings, short and long term
COVID-19 has underscored the need for U.S. workers to be better prepared for health care spending. A health savings account (HSA) can offer several benefits for both short and long term health care savings. For anyone enrolled in a High Deductible Health Care Plan (HDHP), HSAs can help you meet immediate health care costs as well as those you will have later in life when you retire.
When faced with an unforeseen short-term need, such as a high deductible for a trip to the hospital, many people are often forced to dip into their retirement savings. Fortunately, the funds in an HSA can double as an emergency savings account. HSAs have the potential to offer a triple tax advantage: contributions, investment gains and withdrawals are not taxed, if the distribution criteria are met. In addition, when you are enrolled in an HDHP and an HSA, you can choose to leave your funds in your HSA and, instead, cover a medical bill “out of pocket”. This strategy is one way HSAs can serve as a potential emergency savings vehicle for unanticipated health care costs. Since HSA funds are renewed every year, many HSAs also offer investment options that can give you the opportunity to invest in long-term investment funds, such as stocks.
Pay off student loan debt
According to recent data from the Federal Reserve, US student borrowers owe a total of $ 1.7 trillion in student debt. Now considered one of the highest categories of consumer debt – next to mortgage debt and higher than credit cards – the latest statistics show just how bad the student debt crisis has become for students. borrowers, including those nearing retirement. On total student debt, a recent AARP analysis showed that at the end of 2020, borrowers aged 50 and over owed an estimated $ 336.1 billion, showing that the impact of debt student payroll can really prevent individuals from saving not only for emergencies also putting a dent in a retirement plan.
To help offset the costs of student debt, one place working people should seek support is their employer. Today, many companies offer support in this area, with assistance for the repayment of student loans. In this model, employers make after-tax contributions or direct loan payments to their employees’ student debt managers. This solution can help individuals pay off their debt faster and, in turn, allow them to save more for short-term needs, such as emergency savings.
Care during COVID-19 and beyond
For many caregivers, the routine tasks they perform on behalf of their loved ones have become more complex – and expensive – in recent months. According to the National Alliance for Caregiving and AARP, about 19% of Americans serve as unpaid caregivers for another adult – and of those unpaid caregivers, 61% are employed. With the increased demand on the type of care provided, COVID-19 has caused even more stress for these people.
For those facing caregiving issues, seeking employer support may be overlooked, but many companies have realized that this strain could have a huge impact on productivity and mental health and provide resources for help them. Employee Assistance Programs offer help for a variety of personal situations such as flexible work schedules and stress management seminars. Additionally, working with a finance professional can provide insight into financial solutions that can help address multiple and unique challenges.
More than ever before, individuals are focusing on the importance of emergency savings and continue to turn to their employers for advice on how to prioritize spending and manage debt.
Emergency savings, HSAs, student loans, and even caregiver support services are all examples that are growing in popularity today given the complex and increasingly holistic wellness needs of individuals. When these cornerstones of a budget are under control, you’ll be better prepared to meet your health and wealth needs in the short and long term.
Charlie Nelson is Vice President and Chief Growth Officer of Voya Financial, Inc., which provides healthcare, wealth and investing solutions to individual, professional and institutional clients..
The data presented in this press release, unless otherwise indicated, is based on the results of a financial survey of Voya conducted by Ipsos on the online omnibus platform Ipsos eNation with approx. 1,005 adults aged 18 and over in the United States Research was conducted December 17-18, 2020. This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice on your individual situation. Products and services offered by the Voya® family of companies. Registered Representative of Voya Financial Partners, LLC (SIPC Member).