Let's Talk Savings: The Importance of An Emergency Fund

If you’re feeling unsteady amid stock market volatility, high inflation, and rising interest rates, you may wonder how much cash you really need to have on hand. The right amount to have in your emergency fund depends on your family’s situation and needs.

Here’s how much in cash savings you need at different times in your career:

Dual-earners: Set aside at least three months of expenses
The typical recommendation for dual-income families is savings worth three to six months of living expenses. The reasoning: even if one earner loses their job, there are other income streams to help the family keep up with expenses.

Single workers: Save six months or more
Households with a single earner may benefit from boosting savings to six to nine months worth of expenses. For both single earners and dual-income households, some advisors say it’s better to have higher cash reserves to provide “more options” in case of a job layoff. Recessions typically go hand in hand with higher unemployment, and finding a new job may not happen quickly.

Retirees: Keep one to three years of expenses in cash
With soaring inflation and relatively low interest for savings accounts, large amounts of cash may be a tough sell for some retirees. However, we suggest keeping one to three years of expenses readily available. Having enough cash on hand can limit the need to sell assets when the market is down, a misstep that could drain your retirement balances faster. Of course, the exact amount of cash to keep on hand in retirement depends on monthly expenses and other sources of income.

In sum, there is no perfect amount of emergency savings. Some people are uncomfortable having that much money ‘on the sideline’ and not earning anything, especially when stocks look to be providing a great buying opportunity. For others, the recent economic uncertainty has them adding to their cash reserves. We’re always here to help you find the right balance.


Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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