Don’t let unexpected costs derail your retirement plans. Here’s why an emergency fund really matters.
Imagine you’re just a few years away from retirement, everything’s going on track, and then all of a sudden you get hit with a medical emergency that wasn’t expected. If you don’t have an emergency fund in place, you may find yourself having to sell investments at a loss if the market’s down, or even worse. If you’re under age 59 and a half, you might have to take money from retirement accounts and have to pay penalties If you don’t have one already, start building your emergency fund by setting aside some of your income regularly. A good rule of thumb is to end up having three to six months worth of expenses in your emergency fund. Keep this money in a high yield savings account so it’s easy to access, but it can still grow over time. This should really be your top priority before paying down extra debt or investing.
