Financial Advisors Reveal How Much Cash You Need to Survive a Recession Based on Life Stage
Whether you’re a new graduate or a retiree, peace of mind is priceless.
With inflation soaring, the stock market tumbling, and the possibility of a recession on the horizon, many Americans are wondering how much cash they should have on hand to weather the storm.
How much money you will need to stay afloat during a recession will vary depending on life stage and circumstance — whether you’re a dual-income household, single earner, entrepreneur, or retiree.
Dual-income families, for example, won’t need to save as much as someone with a single income. Two (or more) income families should aim for three to six months of living expenses in reserve, Christopher Lyman, a certified financial planner with Allied Financial Advisors in Newtown, Pennsylvania, .
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If you’re on your own, you might want to make that closer to the six-month mark, experts say. A good rule of thumb? Make sure you have just enough not to worry.
“For a working individual earning income, the goal should be to have just enough cash to provide an emergency buffer to protect against any pitfalls that could hinder financial well-being,” Sergio Garcia, a certified financial planner at BFS Advisory Group in Dallas, .
Generally, entrepreneurs face more economic uncertainty than people with employers, so they should try to have more cash at the ready.
Lyman told CNBC that entrepreneurs and small-business owners should save one year of business expenses, explaining that “this advice saved quite a few of our business owner clients from shutting down due to the pandemic.”
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Ideally, retirees have set themselves up with retirement accounts to enjoy their golden years, but that doesn’t mean they should forego any cash savings — quite the opposite, in fact.
For those with a balanced portfolio of 60% stocks and 40% bonds, consider keeping approximately three years’ worth of anticipated withdrawals in cash, Michael Yoder, a certified financial planner and Principal at Yoder Wealth Management,
In these uncertain times, setting enough aside provides peace of mind — whether you’re a recent graduate or a retiree.
With inflation soaring, the stock market tumbling, and the possibility of a recession on the horizon, many Americans are wondering how much cash they should have on hand to weather the storm.
How much money you will need to stay afloat during a recession will vary depending on life stage and circumstance — whether you’re a dual-income household, single earner, entrepreneur, or retiree.
Dual-income families, for example, won’t need to save as much as someone with a single income. Two (or more) income families should aim for three to six months of living expenses in reserve, Christopher Lyman, a certified financial planner with Allied Financial Advisors in Newtown, Pennsylvania, .
