Over the past several years, the retirement industry has made significant progress on developing and implementing emergency savings solutions for American workers. Looking at data from early adopters, the takeaways are clear—adequate emergency savings can:

• Enhance financial wellness;
• Protect retirement savings, functioning as a buffer against early withdrawals; and
• Serve as an important building block towards increased contributions to retirement, especially for households living on low to moderate-incomes (LMI).

Along with AARP Public Policy Institute and Bipartisan Policy Center, we recently outlined five key principles for public policy innovations in this space:

• Allow for automatic enrollment in workplace emergency savings;
• Ensure emergency savings are their own “bucket” of savings;
• Allow for a wide range of design options, particularly for LMI households;
• Structure emergency savings tools to meet household needs; and
• Safeguard retirement savings.

In this brief, we dive deeper into the final principle, with a focus on how new tools to save for emergencies might impact retirement savings.