Candidly Launches Emergency Savings Solution

Candidly, an artificial intelligence-driven student debt and savings optimization platform, has launched an emergency savings solution that enables workers to activate automated features, such as setting up payroll deduction and rounding up spare change from everyday transactions to contribute to their emergency fund passively.

Candidly, which has been focused on educational debt management and payments, is making the new offering available to users as a workplace benefit through employers, recordkeepers and financial institutions, alongside the firm’s suite of student debt and SECURE 2.0 retirement savings enablement solutions.

“Candidly’s emergency savings can be made available as a stand-alone solution directly to plan sponsors or embedded into a retirement plan adviser’s existing digital experience (often in collaboration with their preferred recordkeeper), offering a more inclusive solution that addresses the full wellness spectrum within the workplace,” Laural Taylor, CEO and co-founder of Candidly, says via email.

The idea of tying an easy-access emergency savings account to retirement savings gathered steam during the financial strains of the COVID-19 pandemic. The SECURE 2.0 Act of 2022 allows employers to make an emergency savings account part of a participant’s retirement plan in 2024, up to a maximum of $2,500. However, due to the operational complexity, Candidly found that demand was far greater for out-of-plan solutions and is servicing that out-of-plan demand for now.

Taylor says Candidly already has several partnerships in place with retirement plan advisers, with a “robust pipeline of plan advisers urgently seeking to respond to plan sponsor demand.”

“Similar to its student debt optimization platform, Candidly has developed deep relationships with retirement plan advisers and recordkeepers to bring emergency savings solutions to market that can direct savings into FDIC-insured, partner-preferred destinations,” Taylor says.

Candidly is also allowing current clients and participants to use custodial and/or deposit-based solutions that permit providers to integrate the emergency savings program into their own systems.

“By expanding offerings to include an emergency savings solution, Candidly provides an easy way for employees to redirect those dollars into emergency savings,” Taylor says. “In addition, this new solution is relevant even for those employees who do not have student loan debt and need to build toward a safety net. This enables Candidly to expand its total addressable market within the workplace with a relevant solution for 100% of the workforce.”

According to Taylor, a record number of American workers have taken a loan or hardship withdrawal from their retirement plan in 2022, translating to losses in retirement readiness, while participant debt has exploded to an all-time high.

Earlier this year, a study by the nonprofit Commonwealth and DCIIA, conducted as part of BlackRock’s Emergency Savings Initiative found that low-income households with at least $1,000 in emergency savings were half as likely as other households to withdraw money from workplace retirement savings accounts during the pandemic.