Senior Financial Alert: 4 popular benefits that can help protect your retirement savings

---

(BPT) - Would you plug a leak if it cost $6 billion a year?

That's the amount of "leakage" or retirement savings lost every year from retirement savers defaulting on their loans from 401(k) plans, according to a 2014 report by the Pension Research Council (PRC), Borrowing from the Future: 401(k) Plans and Loan Defaults. Draining retirement savings for other purposes ultimately makes is harder to prepare for retirement.

But loans and withdrawals from 401(k) plans are sometimes the only options available to workers who are faced with unexpected financial emergencies. Bankrate.com's 2016 Financial Security Index finds that 29 percent of Americans have no savings to address emergencies. But other options are increasingly becoming available.

"Employers are focusing more on improving their employees' financial wellness by making available educational programs and introducing financial products that can help workers protect their savings," says Tom Foster, spokesperson for workplace solutions at Massachusetts Mutual Life Insurance Co. (MassMutual). "It's important to make sure you're aware of all of the benefits your employer makes available and how they can help you manage your personal finances."

Benefits are being introduced at the workplace to help employees address financial emergencies such as a critical illnesses, disabilities, accidents, big car repair bills or other misfortunes without cracking open their retirement savings:

* Pre-approved emergency loans: Some programs allow employees to obtain credit online without having to fill out forms or visit a bank. The most helpful programs prequalify employees for credit based on their employment and their ability to repay. Often, employees can repay the loans through payroll deduction. The rates on such loans can be as low as 6 percent.

* Critical illness coverage: Medical treatment and other expenses related to a serious illness can quickly run into several thousands of dollars, especially with the growing prevalence of high-deductible health care coverage. Critical illness policies provide cash for insureds to pay for a myriad of expenses, from medical deductibles and co-pays to pharmaceuticals and comfort-related costs if an employee or a family member suffers a serious illness.

* Accident insurance: Few emergencies can derail personal finances more quickly than an injury caused by an accident, especially for those who live paycheck to paycheck. More than 40 million injuries are treated by emergency rooms every year, according to the 2014 FastStats report on Emergency Department Visits by the U.S. Centers for Disease Control. Policies typically pay cash in a lump-sum to cover anything from medical insurance deductibles and co-pays, down time from work and other unanticipated expenses.

* Disability protection: Many people can't make ends meet for more than a few weeks without a paycheck. A disabling accident or illness can easily knock someone out of work for weeks or even months. Group disability policies are available to cover short-term disabilities that last as long as six months or long-term disabilities that can take years or even become permanent. Many workers should consider securing a policy that protects at least 50 percent of their paycheck and buy additional coverage of up to 60 percent or 70 percent, if available.

Many employers make these benefits available on a voluntary basis, meaning employees pay the premiums at relatively low group rates.

"Taken together or individually, these protection benefits can help shield you against financial misfortunes and give you an alternative to tapping your retirement savings," Foster said. "Then, as your financial situation improves, you can gradually boost your personal and retirement savings to enhance your financial wellness."

---