55% of workers lack $500 emergency savings as Secure 2.0 lags

More than half of U.S. workers cannot cover a $500 emergency expense, and the policy tools Congress created to fix that have barely reached them.

More than half of U.S. workers — 55 percent — cannot cover a $500 emergency expense, a shortfall that pushed 41 percent to skip medical care, food or car repairs, according to a June SecureSave survey of 1,028 workers.

"We have danger more than we've had before, because it's the workers that we know have a job, they have a paycheck coming in, and they are still not making it," said Suze Orman, personal finance expert and co-founder of SecureSave, the workplace emergency-savings provider that commissioned the survey.

The Federal Reserve's 2025 report on household economic well-being found 63 percent of adults could cover a $400 emergency expense via cash, savings or a credit card paid off at the next statement — unchanged for three years after peaking at 68 percent in 2021. Annual inflation ran 3.4 percent in July, above the Fed's 2 percent target, while average gas prices topped $4 a gallon, the highest on record for this time of year, per GasBuddy. Total household debt reached $18.8 trillion in the second quarter, up $4.6 trillion since end-2019, with credit card balances at $1.26 trillion and auto loans at $1.71 trillion, the Federal Reserve Bank of New York said.

The strain is leaking into retirement accounts. The share of Vanguard defined-contribution participants taking hardship withdrawals rose to 6 percent in 2025 from 2 percent in 2020, the firm's How America Saves report shows. "Leakage from retirement accounts is becoming a bigger and bigger problem," said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center. "A primary solution to that is finding tools to help employees save for emergencies."

Secure 2.0 Tools Have Barely Reached Workers

Congress's Secure 2.0 law, passed in 2022, lets defined-contribution plan participants withdraw up to $1,000 a calendar year for emergency expenses without penalty, though the sum generally must be repaid before further withdrawals within three years. It also allows automatic enrollment into pension-linked emergency savings accounts, or PLESAs, with annual contributions capped at $2,600 for 2026, withdrawn free of taxes and penalties.

Adoption has been slow. Just 4 percent of 401(k) plans allow the $1,000 emergency withdrawal, per a Vanguard analysis. PLESAs "really haven't gone anywhere" because of the time needed for regulations and record-keepers to catch up, said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute. T. Rowe Price said in April 2025 it was the first to launch PLESAs.

The workplace emergency-savings accounts that have gained traction sit outside retirement plans, Copeland said — offerings from SecureSave and Sunny Day Fund, plus efforts by asset managers including Fidelity and BlackRock. For employers, emergency savings can be an inexpensive benefit, particularly when they only handle the payroll deduction. "When they provide the benefit, they do see that people are participating at pretty high rates," Copeland said.

Lawmakers Push to Widen Emergency Savings Access

Secure 2.0's biggest impact was drawing attention to the problem, Akabas said, noting an "exponential increase" in employers offering emergency-savings plans in recent years. Further legislation could accelerate that.

A bipartisan proposal, the Emergency Savings Enhancement Act, would raise the maximum annual PLESA contribution to $5,000 and expand eligibility to employees who meet retirement-plan requirements, including highly compensated employees — those earning more than $160,000 in 2026 or owning more than 5 percent of a business, per the IRS. The bill recently advanced out of the Senate Committee on Health, Education, Labor and Pensions.

The stakes are measurable: if the tools reach workers, the roughly $1.26 trillion in credit card balances and elevated auto-loan delinquencies flagged by the New York Fed could ease as households build buffers. If adoption stays thin, the hardship-withdrawal trend that drained retirement accounts through 2025 is likely to persist. Policy figures above reflect Secure 2.0 provisions and IRS thresholds as published; readers should verify them against the latest official announcements.

This article is for informational purposes only and does not constitute investment advice.