Now that you’ve retired, your emergency fund might look a little different from your working years, not only in the size of the fund but also for items on which the funds might be used. While working at Lockheed Martin, you had a weekly paycheck. In retirement, you have a monthly pension check. So, how much should you have in your emergency savings fund?
Your emergency savings fund should still be in place once you have retired and possibly even larger depending on your situation. While working, most people have three to six months of expenses set aside, so they can cover a gap in employment if necessary; however, when retired your pension isn’t in jeopardy but your emergency needs could be much larger if the emergency is a result of a medical, dental or home incident. If you have one of these emergencies, you need to have the cash on hand to pay for it and still pay for your monthly expenses. So, first, use our calculator found here to calculate your monthly retirement expenses by adding up the following:
- Housing costs for both primary and any vacation homes
- Food and entertainment
- Utilities, phones & other recurring bills
- Auto costs – payments, insurance, maintenance, etc.
- Debt payments if you have any
- Health care expenses and medications not covered by insurance or Medicare
- Insurance premiums for health, life, or long-term care insurance
- New hobbies acquired in retirement
- Travel
- Costs associated with any side business
Once you have these add up, you now know your minimum monthly expenses. Next, determine how many months of expenses you’d feel comfortable with having set aside in an FDIC-insured high-interest savings account. Many retirees prefer to have 6-12 months in savings; whereas, other retirees like to have a specific dollar amount (e.g.: $20,000). After you have decided which you’d prefer and the amount, then it’s time to either start building to that amount or rearranging your current portfolio if you don’t already have that amount in savings.
Determining the right amount to have in emergency savings is an important part of living a secured retirement with peace of mind. Give us a call to speak to a Lockheed Martin retirement specialist who can help you determine the appropriate amount of emergency savings for your situation.
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