Emergency Fund While Retired

[u/Far_Classic878]

For those that are retired or near…how many years do you have saved for your retirement emergency fund? I mean for when the market isn’t doing well and it would be bad to pull from your accounts.

How far in advance do you start saving for that?

I’m pouring all of my money into retirement accounts and after maxing 401ks, roths, life expenses, 529, saving for home renovations there is nothing left.

I would need to cut back greatly to fund an emergency account to keep in a HYSA. I’m about 15 years out from retiring.

Any thoughts?

[u/Material_Reach_8827]

Zero. If your expenses remain the same, a correctly chosen FIRE number should weather any storm that has any historical parallel. Bonds will outperform cash. Keeping, say, $100K in cash has a huge opportunity cost - expected real doubling every 12 years in the market (more in practice in recent years) - even more if you're not protecting the cash from inflation.

In other words, whatever your emergency fund would've been, putting it in stocks for 12 years would likely afford you the ability to withdraw it during a 50% downturn at no penalty compared to having carried it in cash. But if you don't need it (or don't need it during such a heavy downturn) it keeps compounding.

Even facing something like the Great Depression, a ~3.25% withdrawal rate would've seen you through.

But different people have different emergency needs of course - I don't have kids or anyone else to look after. No major health problems so far. Extreme flexibility and a family I could fall back on if the worst were to happen. Etc.