Cash Reserve Needs May Change In Retirement

A basic tenet of managing your finances is to have a cash reserve equal to three to six months of your basic fixed expenses – mortgage or rent, insurance premiums, car payment, etc. – as well as variable expenses such as food and gas, in the event that you lose your job, become ill or injured, or experience any other crisis that interrupts your ability to earn your salary.

When you retire, your need for a cash reserve continues but the reason changes. Your income in retirement comes from assets you accumulated during those earning years, from Social Security (depending on your age), and possibly from a pension. So while you don’t have to worry about job loss disrupting your income stream, you may need cash to cover unexpected expenses such as car or home repairs and health needs that may not be covered by Medicare or your insurance, such as dental work, vision care, hearing aids or medical tests.

If your retirement income depends heavily on your own accumulated assets, your investment takes into consideration the need for growth that keeps pace with inflation. That can be a double whammy in an emergency – you may not be able to liquidate the amount of assets you need quickly, and you may be forced to liquidate investments during a market downtown, getting less for them and creating a larger gap to recover when the market rebounds.

Having a cash reserve – or the flexibility of instruments like a credit card or home equity line against which you can draw cash – plus paring expenses during an emergency can help you avoid withdrawals from your portfolio to meet unexpected costs during retirement. Your cash reserve needs can also change over time. If you or a loved one has had a change in circumstance that requires you to reconsider your emergency funds, please call your personal financial advisor, Jordan, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com to discuss potential options.

About Jordan Dechtman Wealth Management. Jordan Dechtman Wealth Management is an independent Colorado financial services firm, serving clients since 1984. Jordan Dechtman Wealth Management helps you plan, predict, protect, your future one day at a time.

To learn more about the Jordan Dechtman Wealth Management difference, please contact Jordan Dechtman Wealth Management at 303.741.9772 or www.JordanDechtman.com .
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