Member-only story
A financial planner explains how much you should have in emergency savings if you’re retiring soon — and when to use it
Keeping a larger emergency fund in retirement could help you cover medical expenses, and save your retirement fund during a downturn.
By Liz Knueven
If you’re planning to retire soon, there are a lot of money items on your mind. One thing you might not be thinking about, though, is your emergency fund.
An emergency fund is a simple thing that’s absolutely critical: It’s a savings account kept only for unexpected expenses. Generally, financial planners recommend keeping three to six months’ worth of expenses in this fund.
But, in retirement, that changes, one financial planner says.
Keep a larger emergency fund for retirement — you’ll want about 12 months of expenses
While you could get away with a smaller emergency fund while you were working, you’ll want a larger one in retirement.
Financial planner Mamie Wheaton of LearnLux says that having the extra cash will mean extra security. “I would generally recommend around 12 months of liquid expenses on hand for retirees or someone who is just about to go into retirement,” she said.
