Overwhelming Majority Doesn’t Have Emergency Savings to Last Six Months

More than half of Americans are earning half or less than half of their pre-pandemic income, and 31% have lost their entire income, a FlexJobs and Prudential survey has revealed.

FlexJobs and Prudential surveyed 1,100 FlexJobs members and found that 62% said they do not have enough emergency savings to last six months. Forty-six percent said their savings wouldn’t last three months, and 24% said it wouldn’t even last one month.

Fifty-three percent said they are earning half or less than half of their pre-pandemic income, and 31% have lost their entire income.

While 24% said they were struggling financially before COVID-19 hit, that has now jumped to 44%. Conversely, while 21% of workers felt financially secure before the crisis, that has now fallen to 10%, according to the survey.

Forty-four percent of survey respondents said they do not earn enough money to achieve their financial goals. Thirty-five percent say the high cost of living is their main barrier, and 26% say it is having too much debt. Fifteen percent said they do not have access to workplace benefits, such as paid time off or health insurance.

As to what employers that have cut employees’ pay can do to help their workers, Carol Cochran, vice president of people and culture at FlexJobs, said they could offer highly performing workers a bonus. For workers taking care of children or the elderly, employers could give them stipends, Cochran says.

To make ends meet, 84% of those surveyed said they are taking concrete steps to shore up their finances until the pandemic ends. Nearly half, 49%, are searching for additional income streams such as a side job, 28% have filed for unemployment and 23% have dipped into their emergency savings. Twenty percent have reduced their retirement contributions, and 8% have withdrawn money from their retirement account.

To help workers who have taken withdrawals or loans from their retirement plan, Cochran suggests employers increase their match.

As to what workers who have had their pay cut or who have lost their job altogether can do, Cochran says they should start by cutting their discretionary spending and establishing a new budget. “There may be a series of seemingly small places to make cuts that can add up to make a difference,” she says. “Call your credit card companies to see if a lower interest rate is available to you. If you have a mortgage, is refinancing a viable option? This can save a significant amount of money in the long run.”

And, for all workers, regardless of their current financial situation, Julie Brandon, vice president and head of financial wellness distribution at Prudential, said it is imperative that they start—or add to—their emergency savings.

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Northshire Selects 401GO for Chambers of Commerce Platform

The partnership with the recordkeeper will focus on the firm’s National Chamber of Commerce Micro Market Solution.

Northshire Consulting, which works with chambers of commerce across the nation, has selected 401GO as the recordkeeper for its National Chamber of Commerce Micro Market Solution.

The solution allows chambers of commerce to offer a robust retirement plan and is designed for startup and small market plans to relieve them of many fiduciary duties and operational procedures.

“What we consistently hear from chambers is their desire to add value to their membership and bring new opportunities to the table,” Brian Williams, president of Northshire Consulting, tells PLANSPONSOR. “Chambers of commerce have had some revenue issues because they can’t hold events” due to the coronavirus pandemic and the related shutdowns. “They are also having trouble collecting membership dues and are not eligible for the PPP [Paycheck Protection Program] loans.

“Whether the solution is this micro market solution, a pooled employer plan [PEP] or an association retirement plan, Northshire can bring a full suite of options to chambers,” Williams continues, noting that Northshire Consulting selected 401GO as the recordkeeper for small chambers of commerce. For larger chambers, Northshire has partnered with Newport Group to create a pooled employer plan. These chambers of commerce can then, in turn, offer retirement plans to their members, Williams says.

“There are 50 to 60 million Americans who have no access to a retirement plan,” he notes. “Chambers are uniquely positioned to offer these plans to their members,” due to the association rule that came out a year ago that allows employers that are members of an association to form a group retirement plan.

Northshire says 401GO’s data infrastructure will integrate with its proprietary supplementary statement system and with local 401(k) advisers serving their respective chambers.

“With the association retirement plan ruling in July 2019 and the SECURE [Setting Every Community Up for Retirement Enhancement] Act passing in December, it paved the way for chambers to take a real leadership role in the financial wellness of their community,” Williams adds. “The chamber structure is uniquely positioned to be a trusted entity with their local businesses. Going forward, we believe chambers will play a key role in helping the 50 million American workers without access to a workplace retirement account.”

401GO was founded by entrepreneurs and business owners with an eye to provide small companies with a 401(k) plan that is intuitively easy to set up and administer. The founders say that the recordkeeping system does the work of three to four providers.

Jared Porter, CEO of 401GO, said he launched his platform in 2018 specifically to help small businesses set up retirement plans.

The company does not require users to put up capital up front, he says. There are no set-up, filing or document fees—only a $9 per participant monthly fee.

“Our platform combines the functions of recordkeeping with third-party administration, and we can work with financial advisers that are a 3(38) fiduciary,” Porter tells PLANSPONSOR. “We provide all of the administration through our platform, such as eligibility tracking, notifying participants when they have been automatically enrolled or handling withdrawal or loan requests. A chamber can set up a 401(k) platform within 15 minutes, and they can co-brand the platform.”

401GO is also available directly to small businesses.

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