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March 27, 2010


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Hey FMF,

A good idea for a post on the bible and money: scripture calling Christians to have an emergency fund.

I agree with your response. Most Americans are not properly prepared for retirement much less an emergency fun WHILE retired. On year's worth of spending cash is a lot of money to set aside, even if you are retired.

Somehow I'm not clear on this concept. why would retirees need an emergency fund? they are not going to lose their jobs. They presumably have enough income to supplant a salary and it should be fixed. If you mean funds for broken cars, or plumbing or other house repairs, then that makes sense. But that is oh say 10k. What am I missing?

I am always surprised by the number of people who think that a 10K emergency fund is sufficient for any and all emergencies. For many people, 10K may be more than enough. But for many other people, a 10K emergency fund won't be at all sufficient.

Retirees might need a larger emergency fund for many reasons. If you need to put a new roof on a house, that can run you more like 12k - 20K easily. And, if you have more than one emergency like that in a exactly are you going to fund it?

A real emergency fund protects a person/family from more than just 1 event. It also is large enough that you can weather an emergency and be able to replenish the fund before another emergency increased taxes, needing a new roof, having a dental issue, needing a new car and not wanting to go into debt for it....if all of those things happened in a 12 month span - it wold be pretty much impossible to weather it with only 10K and be able to replenish before the next shoe dropped.

I think the real reason for this large emergency fund is that it is also part of your mix of funds at retirement. When you retire, you should have a much larger portion invested safely so that when the market dives, you are protected, especially with 4 years of living expenses safely tucked away in a CD.

Emergency funds are like shoe sizes. One size does not fit all. And like emergency funds, short of the right fit, I prefer something that may be too big than something that may be too small. :D

I'd want a large emergency fund in retirement simply so I wouldn't need to make withdrawals if my investments tanked or something...backup is always nice.

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