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Where is your retirement fund?



By now, most people know that financial planners recommend saving expenses for three to six months in the event of an emergency or unemployment.

This may be even more important to retirees considering that many haven’t saved enough and run out of regular paychecks when something happens.

“There are still unexpected expenses,” said Dana Anspach, founder and CEO of Sensible Money in Scottsdale, Ariz. And author of “Control Your Retirement Destiny”. “It could be dentist bills, home repairs, or car repairs. We often see a family member in need of help – an adult child loses his or her job and suffers from unemployment or divorce. I’ve seen clients take custody of grandchildren. All kinds of things happen. “

Most Americans are not prepared for an unforeseen emergency. According to a survey by Bankrate.com, a personal finance website, only 40 percent could cover unexpected expenses of $ 1

,000. Many would be forced to borrow cash or use a credit card.

According to Anspach, the emergency fund has no impact on your Medicare or long-term care policy. It become Have an impact if you apply for Medicare, but until then, you’re still spending your assets, she said.

How much money should retirees have put aside?

“If your income is from Social Security or a pension that is very secure, which means that the company or government guarantees that the pension is highly financially secure, you may only need a few months to spend,” said Ric Edelman , Author, radio host and founder of Edelman Financial Engines. “But that Not describe most retirees. Most have income from various sources, none of which is guaranteed. You get a pension from shaky employers, unstable pensions and investments that can lose money in a market crash. “

Nathan Boxx, head of retirement planning at Fort Pitt Capital Group in Pittsburgh, Pa., Says a retiree’s emergency fund may be slightly less than that of working people. “Hopefully your mortgage is paid off and you only have one car. Spending tends to decrease. The greatest will be the medical coverage covered by your Medicare or supplementary premiums. “

Boxx says retirees should have a home equity line of credit to help them meet unexpected expenses. “Usually it doesn’t cost anything when it’s there. You can write a check when you have a disaster like a flooded basement. It’s very cheap money. And it gives you time to figure out what pool of money you will fall back on to pay it off or slowly pay it off over time. “

Where should it be invested?

It has to be in a safe place, ”said Anspach. “You won’t get a lot of interest, but it will be accessible.” she said a trap People in emergencies use retirement accounts. “When everything is deferred, you pay taxes on everything. It can bump you into another bracket. A money market fund or a bank savings account gives you a lot of flexibility. What it really brings is peace of mind. “

“There’s a psychological component to having a healthy reserve of cash outside of the exchange,” Boxx said. “When we are going through periods of high volatility, like we just did, having that cash reserve on your side can be comforting.”

Rodney A. Brooks writes on retirement and personal finance issues. His column is currently running in US News & World Report. He has written columns on retirement for The Washington Post and the US TODAY. He also wrote for National Geographic, Next Avenue and Black company Magazine. He acted as deputy editor-in-chief / personal finance and columnist for USA TODAY in 2015.

The use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services make no claim or promise of any result or success.

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