According to a survey by SecureSave, 55% of workers do not have enough savings to cover a $500 emergency expense, indicating a troubling financial situation for many households. This lack of savings has led to 41% of respondents skipping necessary expenses like medical care and food.
The Federal Reserve's report shows that only 63% of adults can cover a $400 emergency, a figure that has remained stagnant over the past three years. Rising costs, including an annual inflation rate of 3.4% and record-high gas prices, are exacerbating financial pressures. Household debt has reached $18.8 trillion, with auto loan and credit card balances nearing all-time highs.
As a result, more retirement savers are resorting to hardship withdrawals, which increased from 2% in 2020 to 6% in 2025. The Secure 2.0 legislation aims to improve emergency savings by allowing penalty-free withdrawals from retirement accounts and promoting pension-linked emergency savings accounts (PLESAs).
However, participation in these programs remains low, with only 4% of 401(k) plans offering emergency withdrawals. Experts like Shai Akabas from the Bipartisan Policy Center stress the importance of addressing the emergency savings gap, suggesting that further legislative efforts could enhance participation and contribution limits for emergency savings accounts