Companies Helping Workers Build Emergency Funds
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What is the main topic discussed in this episode?
Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. If the company you work for gave you incentives, financial incentives, to put money in a retirement or another kind of savings account, would you? In a moment, we'll tell you about companies doing just that. First, these money and market stories you should know.
What are the current mortgage and market headlines affecting savers?
The 30-year fixed rate mortgage averaged 3.82% in the week of June 13th. That's unchanged from a week ago, and it's at roughly a two-year low. What's significant is that about halfway through the year, the 30-year mortgage has increased only six times. Fixed-rate mortgages move in lockstep with the 10-year U.S. Treasury note, which has come down as investors grow increasingly concerned about the strength of the economy and the potential effects of a trade war. And what do Bitcoin, carbon dioxide, and Las Vegas have in common?
How much CO2 does Bitcoin mining produce compared to cities and countries?
Researchers at MIT and the Technical University of Munich wanted to figure out how much power is consumed by computers used to generate Bitcoins and to process transactions. Well, they ran the numbers and the results were in late 2018, the entire Bitcoin network was responsible for about 23 million tons of CO2 per year. That's similar to a city like Las Vegas or an entire developing country like Sri Lanka. Now, that may seem like a lot, but consider that the total global emissions of CO2 from the burning of fossil fuels were about 37 billion tons last year. And with regard to computing power used to mine bitcoins, the researchers said about 68% of that activity is in Asia, 17% is in Europe, and 15% is in North America.
On numerous occasions, we've covered an ongoing problem in personal finance that Americans do not have enough put away in savings and are not putting aside enough money for retirement.
Why are employers focusing on employees' financial wellness now?
Well, a growing number of companies are stepping in to help their employees build on savings accounts, and Wall Street Journal retirement reporter Ann Tergesen is here with some details. So, Ann, the companies are recognizing a two-part problem here, that if people are struggling to save for emergencies and pay down debt, then it's unlikely they're putting retirement money away.
Yeah, that's right. I think over the last couple of years, there's been a lot of emphasis among corporations on what they call financial wellness for their employees. And in the course of kind of emphasizing that, I think companies are starting to take a much more holistic look at people's finances. And they're realizing that just offering an attractive 401k plan doesn't necessarily solve the retirement savings problem that people are having. Because if people are
How does SunTrust’s Momentum OnUp program incentivize emergency savings?
making mistakes with the rest of their finances and they're, you know, maybe taking on too much debt or they're not saving for emergencies, then they're going to come to their 401k and kind of rate it when they have emergency needs.
And you mentioned some significant data in your story from the Fed and the IRS that employees are withdrawing upwards of 40 cents of every dollar that goes into a 401k account before retirement.
Right. And that's, you know, that's over time. But yes, and that can really impact people's retirement readiness. So people on the whole, I think the finding from Boston College researchers is that retirement savings is 25 percent less in aggregate than it would be, given the fact that people do kind of prematurely raid their 401ks.
How is Prudential piloting emergency accounts inside 401(k) plans?
And they said that that could over time bring down the overall income of the nation.
Yeah, it affects the aggregate retirement savings of Americans.
And just to go back to emergency savings for a moment, it's a problem that seems to affect people across numerous income groups.
Yeah, it's interesting. I mean, I think there is evidence, and I haven't delved into this too deeply, there is evidence that people who are from the lower income quintiles are disproportionately affected, but there are definitely people who are from the upper income quintiles who also are unprepared for emergencies. They just don't have the kind of liquid savings that they need.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:24
2
What are the current mortgage and market headlines affecting savers?
0:24–0:56
3
How much CO2 does Bitcoin mining produce compared to cities and countries?
0:56–2:03
4
Why are employers focusing on employees' financial wellness now?
2:03–2:52
5
How does SunTrust’s Momentum OnUp program incentivize emergency savings?
2:52–3:37
6
How is Prudential piloting emergency accounts inside 401(k) plans?
3:37–4:17
7
What benefits do companies expect from helping employees build emergency funds?
4:17–7:06
Speakers
2 identifiedMore from WSJ Your Money Briefing
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