More than half of US employees have no emergency savings or less than three months of expenses set aside, yet only a small share of employers offer a formal programme to help workers build a financial cushion.
The findings come from Gallagher's 2026 US Workforce Trends Report: Financial Benchmarks. Its employer survey included 3,717 US organisations surveyed from January through March 2026. Separate employee data from Gallagher's Financial Health Assessment found that 27% of participants had no emergency savings, while another 24% had less than three months of expenses saved.
The two figures come from different surveys and should not be treated as one combined sample. Gallagher also found that 74% of employees in its assessment considered their finances when making healthcare decisions, highlighting how financial pressures can affect choices beyond day-to-day spending.
Despite this need, just 5% of surveyed employers offered a formal emergency savings programme.
For HR teams, the findings raise a practical question: how can employee benefits help people manage unexpected costs without undermining their longer-term financial security?
Why Employees Turn to Retirement Savings During Financial Hardship
When employees face an unexpected bill without sufficient cash savings, retirement accounts can become a source of emergency funds.
Vanguard's How America Saves 2026 report found that approximately 6% of eligible participants in the defined-contribution plans it administers took a hardship withdrawal in 2025, compared with 4.8% in 2024 and 3.6% in 2023. The figures apply to Vanguard-administered plans that permit hardship withdrawals, rather than the entire US workforce.
The median hardship withdrawal was $1,900. Vanguard reported that the most common reasons were avoiding foreclosure or eviction, accounting for 36% of withdrawals, and medical expenses, accounting for around 30%.
The report also found that 45% of participants had less than $2,000 in emergency savings. Vanguard noted that easier withdrawal processes may partly explain the increase in hardship withdrawals, alongside continuing financial pressures.
Hardship withdrawals can provide access to money during a difficult period, but they may also reduce retirement savings. They are generally subject to income tax, and an additional 10% tax may apply to early distributions unless an exception is available.
For HR and benefits teams, the findings underline the tension between helping employees meet immediate financial needs and protecting their long-term retirement readiness.
Emergency Savings Accounts Offer Another Option
Employers do not have to rely solely on traditional retirement plans to help employees prepare for unexpected expenses.
The SECURE 2.0 Act of 2022 introduced pension-linked emergency savings accounts (PLESAs), allowing eligible employees to build short-term savings alongside a workplace retirement plan.
For 2026, the maximum employee-contribution balance is $2,600, although an employer may set a lower limit. These accounts are designed for non-highly compensated employees and use after-tax Roth contributions. Plans may automatically enrol eligible employees at a contribution rate of up to 3% of compensation.
Participants must be allowed to withdraw funds at least monthly, subject to the plan's terms. Unlike a traditional hardship withdrawal from a retirement account, PLESA withdrawals are not subject to the 10% early-distribution tax.
A separate SECURE 2.0 provision also permits qualifying emergency expense distributions of up to $1,000 from eligible retirement plans without the additional 10% early-distribution tax. Restrictions apply to repeat withdrawals, including repayment rules and waiting periods.
These provisions give employers options to consider, but they are not mandatory features of every retirement plan. HR teams should review the applicable rules and consult their plan administrator before making changes.
What HR Teams Can Do to Support Financial Wellbeing
Emergency savings are only one part of employee financial wellbeing. Gallagher's findings also show that financial concerns can influence healthcare decisions, making it useful for employers to look at how benefits work together.
HR and benefits leaders can start with several practical steps.
Review retirement-plan withdrawal patterns. Work with the plan administrator or recordkeeper to understand hardship withdrawals and loans, including how frequently employees use them and which reasons are reported.
Assess emergency savings options. Explore whether a pension-linked emergency savings account or an external savings programme would suit the workforce, taking eligibility, administration, cost and employee access into account.
Make existing benefits easier to understand. Employees may not know which savings tools, financial guidance services or support programmes are available. Clear communications can help them make informed decisions.
Offer financial education without judgement. Practical guidance on budgeting, emergency funds, debt and benefit choices can help employees assess their options. Avoid assuming that employees lack savings because they manage money poorly; income, living costs and unexpected expenses all affect financial resilience.
Evaluate the programme's usefulness. Track participation and employee feedback, while protecting individual financial information. Use the findings to improve access and communication rather than treating participation alone as proof of better financial outcomes.
Helping Employees Balance Immediate Needs and Retirement Security
Emergency savings programmes cannot remove every source of financial stress, and not every employer will be able to introduce a new benefit immediately. However, reviewing existing retirement-plan data and available savings options can help HR teams understand where support may be most useful.
Gallagher's findings point to a gap between employees' reported financial needs and the formal emergency savings programmes employers offer. For HR leaders, the opportunity is to assess whether current benefits help employees manage unexpected expenses while keeping longer-term financial goals in view.
A thoughtful approach to financial wellbeing can give employees more options when costs arise and help employers make better-informed decisions about their benefits strategy.
Research sources: Gallagher's 2026 US Financial Benchmarks findings and Vanguard's How America Saves 2026 report.
