The rule of thumb for emergency funds is to have enough saved to cover six months to a year worth of living expenses in case of a job loss or other financial setback.
However, investors approaching retirement may want to consider boosting that rainy-day fund, especially since many Americans are living past 90, says Covestor portfolio manager and Harvest Financial Partners co-founder Jim Wright.
Wright tells Consumer Reports that augmenting the emergency fund can help those in their 60s nearing retirement ride out market volatility and prevent mistakes that will set them back:
Having a financial cushion means you’ll be less tempted to sell your stocks during a downturn.
So expand your emergency fund to cover more than a year of expenses, up to five years, says Jim Wright, a portfolio manager at Covestor, an online asset management company.
Harvest Financial Partners, based in Paoli, Pennsylvannia, manages the Domestic Dividend Investment Portfolio.
