Roadside Assistance – Building Your Emergency Reserves

An emergency reserve is more than just cash in the bank—it’s the cushion that keeps your plan steady when life takes an unexpected turn. From medical bills to home repairs to market downturns, having the right amount of money set aside can mean the difference between peace of mind and panic. In this episode, Ryan Zacharczyk, CFP®, and Zane Belcak explain how to calculate the right reserve for your lifestyle, where to keep it so it’s safe but accessible, and how to build your emergency fund step by step without derailing your long-term goals.

 

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Episode Transcript

(00:01):
Welcome to retirement GPS navigated by synergy, your roadmap to a secure and confident retirement.
Each week we explore strategies, stories, and planning frameworks designed to help you navigate the complexities of life after work, from tax planning to investments, income strategies to risk management.

(00:21):
Our goal is to give you the clarity and confidence you need to make informed decisions.
But retirement isn't just about the numbers.
It's also about lifestyle, purpose, and peace of mind.
We are here to guide you through both the financial details and the personal dimensions of this next chapter.
Let's chart today's course. 8 00:00:46,637.727272727 --> 00:00:55,157.727272727 Welcome back to episode four of the Retirement GPS podcast, where we help you stay on course towards a confident, purpose-driven retirement. 9 00:00:55,367.727272727 --> 00:01:00,257.727272727 I'm your host, Ryan Zaharek, certified financial planner and founder of Synergy Retirement Planning. 10 00:01:00,857.727272727 --> 00:01:09,167.727272727 And of course, as usual, I'm joined once again by my co-host, associate planner, the man, the myth, the legend, synergies, Zane Sack. 11 00:01:09,287.727272727 --> 00:01:10,37.727272727 Hey Zane, welcome. 12 00:01:10,547.727272727 --> 00:01:11,477.727272727 Hey, thank you, Ryan. 13 00:01:11,477.727272727 --> 00:01:12,707.727272727 I really appreciate the intro. 14 00:01:12,871.060606061 --> 00:01:13,951.060606061 It's always great to be here. 15 00:01:14,537.727272727 --> 00:01:24,77.727272727 Today's topic is, one I'm especially glad we're diving into, because whether you're just getting close to retirement or starting your financial journey, this is something that applies to everybody. 16 00:01:24,782.727272727 --> 00:01:25,562.727272727 It's exactly right. 17 00:01:25,562.727272727 --> 00:01:27,542.727272727 I don't care if you're 22 or 82. 18 00:01:27,822.727272727 --> 00:01:32,992.727272727 If you are not thinking about an emergency reserve, then you have not started financial planning yet. 19 00:01:33,112.727272727 --> 00:01:37,552.727272727 I don't even care if you started a 401k or put money in a Roth IRA. 20 00:01:37,642.727272727 --> 00:01:39,382.727272727 Emergency reserves are foundational. 21 00:01:39,382.727272727 --> 00:01:43,882.72727273 They're your roadside assistance when it comes to your financial needs. 22 00:01:44,277.72727273 --> 00:01:49,47.72727273 And it may not be that much of an exciting topic to most people, but there's a lot of nuance to it. 23 00:01:49,97.72727273 --> 00:01:53,27.72727273 And frankly, a lot of people don't even know where to start 'cause they feel like it can be overwhelming. 24 00:01:53,487.72727273 --> 00:02:02,607.72727273 Now obviously our topics and our conversations are tiered towards retirees, but we also are gonna touch a little bit on people just starting out. 25 00:02:03,426.51113508 --> 00:02:09,666.51113508 So we give everybody an opportunity to learn how to have a proper emergency reserve for their retirement plan. 26 00:02:09,666.51113508 --> 00:02:12,6.51113508 So let's start with a basic definition. 27 00:02:12,6.51113508 --> 00:02:20,106.51113508 At z we define the emergency reserve as a safe, liquid, and accessible cash component. 28 00:02:20,436.51113508 --> 00:02:23,16.51113508 Okay? So money that you can tap into right away. 29 00:02:23,236.51113508 --> 00:02:24,946.51113508 Let me define each of those. 30 00:02:24,946.51113508 --> 00:02:26,986.51113508 So safe means that. 31 00:02:27,391.51113508 --> 00:02:28,891.51113508 It's as guaranteed as we can. 32 00:02:28,951.51113508 --> 00:02:32,101.51113508 We can really get in this world, right? We want it to be safe. 33 00:02:32,101.51113508 --> 00:02:33,661.51113508 We don't want it to be at risk. 34 00:02:34,231.51113508 --> 00:02:40,541.51113508 Liquid means that we don't have to trade it, sell it, exchange it for cash. 35 00:02:40,601.51113508 --> 00:02:42,521.51113508 It is already cash ready to go. 36 00:02:43,51.51113508 --> 00:02:45,481.51113508 And accessible means that we can get at it. 37 00:02:45,511.51113508 --> 00:02:51,191.51113508 We like to say in 48 hours time, 72 hours tops, but we can get the money right away. 38 00:02:51,681.51113508 --> 00:03:00,451.51113508 And obviously the easiest way to save an emergency reserve is to set up a high yield savings account, money market account, and of course a checking account. 39 00:03:00,851.51113508 --> 00:03:04,31.51113508 But we typically don't like to see a checking account as emergency or reserve. 40 00:03:04,341.51113508 --> 00:03:07,241.51113508 But anything safe, liquid, and accessible. 41 00:03:08,11.51113508 --> 00:03:10,891.51113508 But it's important to understand this money is not invested in the market. 42 00:03:11,661.51113508 --> 00:03:13,401.51113508 It's not tied to long-term goals. 43 00:03:13,401.51113508 --> 00:03:15,651.51113508 It's there purely for an emergency. 44 00:03:15,651.51113508 --> 00:03:16,731.51113508 If an emergency were to come up. 45 00:03:18,351.51113508 --> 00:03:21,411.51113508 And that really, it seems like it applies to every age. 46 00:03:21,726.51113508 --> 00:03:26,616.51113508 You know, being relatively young, and even in my own life, I can see the importance of this. 47 00:03:26,646.51113508 --> 00:03:28,956.51113508 I have a good little tidbit of a story to tell. 48 00:03:29,329.84446841 --> 00:03:37,199.84446841 A while back, I actually had a sudden car issue, completely random and thousands of dollars just outta the blue for repairs. 49 00:03:37,929.84446841 --> 00:03:44,529.84446841 Because I had an emergency reserve, I really didn't need to put it on a credit card or dip into my investments, which is most important. 50 00:03:45,84.84446841 --> 00:03:51,984.84446841 Especially when you're at an age where building credit and investments are so important, this emergency reserve is really a lifesaver. 51 00:03:52,701.51113508 --> 00:03:58,461.51113508 This is your foundation and before you invest, before you even talk about retirement, build this. 52 00:03:59,44.84446841 --> 00:04:04,804.84446841 and for people who are near retirement, emergency reserve are even more important if an unexpected expense were to come up. 53 00:04:05,599.84446841 --> 00:04:06,949.84446841 And you don't have that cash on hand. 54 00:04:06,949.84446841 --> 00:04:19,709.84446841 You don't wanna be forced to sell investments at a bad time or take taxable withdrawals, and push yourself into higher tax brackets when we're planning these multiple sophisticated tax strategies like Roth conversions and things like that. 55 00:04:19,709.84446841 --> 00:04:25,289.84446841 So having that emergency reserve is great and it is something that. 56 00:04:25,699.84446841 --> 00:04:32,299.84446841 We don't even start talking about any other concept in financial planning until we know that this one is taken care of. 57 00:04:33,189.84446841 --> 00:04:36,189.84446841 Now, lemme tell you a little bit of the story of Susan. 58 00:04:36,239.84446841 --> 00:04:38,369.84446841 Susan's been one of our long time members. 59 00:04:38,739.84446841 --> 00:04:50,199.84446841 She retired from her career as a school teacher a few years ago, and she had a really well structured plan between her pension, social security, and then the investment distributions that we had set up for her. 60 00:04:50,199.84446841 --> 00:04:50,944.84446841 Things were running really smoothly. 61 00:04:51,536.60626863 --> 00:04:52,826.60626863 She was really active in her community. 62 00:04:52,826.60626863 --> 00:04:55,346.60626863 She was traveling, she was helping out with her grandkids. 63 00:04:55,346.60626863 --> 00:05:01,356.60626863 She was living the retirement lifestyle that she had dreamed and frankly, that a lot of people have dreamed. 64 00:05:02,60.89166929 --> 00:05:08,420.89166929 Then her furnace broke and this was right in the middle of February, so there was no waiting. 65 00:05:08,580.89166929 --> 00:05:25,184.22500262 It was falling below freezing and she needed to get heat in her house and it actually happened to coincide with the same time that she had just approved a major expense on her car so she had a $15,000 furnace bill and then she had a car repair that was over $4,500. 66 00:05:25,574.22500262 --> 00:05:30,284.22500262 And this all of a sudden, through her cash flow in her budgeting way off. 67 00:05:30,719.22500262 --> 00:05:30,779.22500262 Yeah. 68 00:05:31,379.22500262 --> 00:05:38,749.22500262 And that's the thing, Ryan are you not gonna repair your furnace in the middle of February? It's just difficult to plan for these expenses as they come up. 69 00:05:38,749.22500262 --> 00:05:41,269.22500262 That's why an emergency reserve is just so essential. 70 00:05:41,699.22500262 --> 00:05:44,729.22500262 These are things that are, they're just not an option they have to get done. 71 00:05:45,189.22500262 --> 00:05:54,49.22500262 But the good news is because she was working with Zenergy and we made sure that she had a significant emergency reserve cushion, she was able to pay for these things right out of her savings. 72 00:05:54,329.22500262 --> 00:05:56,519.22500262 It didn't come out of her cash flow, it didn't come out of her budget. 73 00:05:56,549.22500262 --> 00:05:58,379.22500262 It came from her emergency reserve. 74 00:05:58,809.22500262 --> 00:06:05,499.22500262 She was able to write the check, get things done, and then she was able to take time over the next year to replenish that emergency reserve. 75 00:06:06,129.22500262 --> 00:06:14,719.22500262 And the nice thing is she didn't have to dip into her investments when, things potentially could not have been going well in those investments and kept their long-term plan on track. 76 00:06:14,899.22500262 --> 00:06:16,849.22500262 That's the benefit of that emergency reserve. 77 00:06:17,446.01095213 --> 00:06:19,416.01095213 That's really the underlying difference. 78 00:06:19,456.01095213 --> 00:06:28,586.01095213 It turns that stressful situation such as, a new furnace into really a manageable one, just an expense that needs to be paid off because you've already planned for the unexpected. 79 00:06:29,42.6776188 --> 00:06:35,726.01095213 It's not just about being prepared, it's about avoiding stress when life really throws something unexpected your way. 80 00:06:36,746.01095213 --> 00:06:38,666.01095213 And Ryan, a good question. 81 00:06:38,666.01095213 --> 00:06:39,956.01095213 Listeners may be thinking. 82 00:06:40,416.01095213 --> 00:06:44,836.01095213 What's enough? How much should I have in my emergency reserve? It's a good question. 83 00:06:44,916.01095213 --> 00:06:46,146.01095213 And there is no right answer. 84 00:06:46,146.01095213 --> 00:06:50,706.01095213 I usually like to say emergency reserve is as much art as it is science. 85 00:06:51,210.39898726 --> 00:06:57,890.39898726 We have people we work with that have, five and $10,000 in emergency reserve, which we think is too low. 86 00:06:58,440.39898726 --> 00:07:03,450.39898726 We also have people we work with that have $500,000 in emergency or reserve, which we think is too high. 87 00:07:03,850.39898726 --> 00:07:04,720.39898726 So again. 88 00:07:05,95.39898726 --> 00:07:09,625.39898726 There is a level of comfort that is really right for the individual. 89 00:07:09,625.39898726 --> 00:07:11,485.39898726 And let me just kind of elaborate on this. 90 00:07:11,485.39898726 --> 00:07:20,515.39898726 The reason why the person with 5,000 in their emergency reserve doesn't want anymore is simply because they're worried they're gonna spend it if they have it. 91 00:07:20,950.39898726 --> 00:07:36,700.39898726 You know, their motto is, if I have it and I see it, I'm gonna spend it so we can work with that person and sort of work around that by, tailoring the investments in the portfolio to set aside a larger cash component to mimic emergency reserve and the case of the person that has 500,000. 92 00:07:37,60.39898726 --> 00:07:39,580.39898726 It is just what allows them to sleep well at night. 93 00:07:39,580.39898726 --> 00:07:51,55.39898726 It allows them to be comfortable so having way too much in emergency reserve is a problem in a different way, but for this person, it's what they want, it's what they feel comfortable with. 94 00:07:51,55.39898726 --> 00:07:52,855.39898726 It's almost like their security blanket. 95 00:07:52,915.39898726 --> 00:07:55,915.39898726 So they're not worried and stressed in their retirement. 96 00:07:56,705.39898726 --> 00:08:00,695.39898726 You've probably heard things, rules of thumb, things like three a month, things like six months. 97 00:08:01,135.39898726 --> 00:08:02,635.39898726 Even a year's worth of expenses. 98 00:08:03,320.39898726 --> 00:08:12,950.39898726 These are all helpful starting points, but I have to tell you and if you're not working with an advisor, just get yourself three months of living expenses Set aside is a great start. 99 00:08:13,40.39898726 --> 00:08:15,170.39898726 It is certainly better than nothing, but. 100 00:08:15,500.39898726 --> 00:08:18,80.39898726 At Synergy, we really talk about finding that right balance. 101 00:08:18,80.39898726 --> 00:08:20,720.39898726 Remember we talked about art and not science. 102 00:08:20,720.39898726 --> 00:08:33,500.39898726 We wanna find that right balance of sleeping well and eating well, and that means having enough cash to feel secure, but not so much that you're giving up the opportunity for that cash to grow and make babies, right, make larger returns. 103 00:08:33,500.39898726 --> 00:08:37,310.39898726 Make kids that are then gonna make kids that are then gonna make kids and grow and grow and grow. 104 00:08:38,47.06565392 --> 00:08:40,987.06565392 That's a good point because something I'm thinking of is. 105 00:08:41,827.06565392 --> 00:08:48,787.06565392 Say you have a hundred thousand dollars sitting in savings, earning, whatever the rate is next to nothing, that might help you sleep at night. 106 00:08:48,967.06565392 --> 00:08:56,227.06565392 But over the course of five to 10 years, the opportunity cost could be just tens of thousands of dollars and lost growth. 107 00:08:56,767.06565392 --> 00:08:57,517.06565392 Yeah, absolutely. 108 00:08:57,517.06565392 --> 00:09:12,723.73232059 And for those who never took Microeconomics 1 0 1, opportunity cost is the resource I have and what I'm doing with it, but what could I be doing with it? Somewhere else in order to either benefit more or less, and in this case, ase points out. 109 00:09:12,723.73232059 --> 00:09:19,563.73232059 The question is if I have a hundred thousand dollars that's sitting in a savings account, earning 3% maybe, if I'm lucky, 4%. 110 00:09:19,933.73232059 --> 00:09:26,513.73232059 And that's really lucky today, if I can get 4% in my savings account, but I'm getting seven or 8% in my investment account. 111 00:09:27,363.73232059 --> 00:09:33,483.73232059 You do the math, you're looking at three to $4,000 a year in growth at al losing year in and year out. 112 00:09:33,483.73232059 --> 00:09:39,313.73232059 As long as that a hundred thousand is sitting in savings, that's our opportunity cost, so, exactly right, Zane. 113 00:09:39,313.73232059 --> 00:09:40,933.73232059 The goal here is to strike the balance. 114 00:09:41,13.73232059 --> 00:09:45,693.73232059 We typically recommend anywhere from three to 12 months of essential expenses. 115 00:09:46,278.73232059 --> 00:09:50,238.73232059 Things like food, housing, medical bills, transportation, insurance. 116 00:09:50,508.73232059 --> 00:09:59,658.73232059 Now three to 12 months is a very broad range, right? You could drive a truck through that range, for somebody who's spending $5,000 a month on those expenses. 117 00:10:00,298.73232059 --> 00:10:03,838.73232059 Three months is 15,000, and 12 months is 60,000. 118 00:10:03,838.73232059 --> 00:10:10,48.73232059 That's a huge range, and the reason why it's a huge range is 'cause like most things in financial planning, it's different for each person. 119 00:10:10,348.73232059 --> 00:10:18,298.73232059 For from each person based on, again, what their comfort level is, but also, what is the guaranteed level of their income sources. 120 00:10:18,298.73232059 --> 00:10:26,788.73232059 If we have somebody who is a salesperson who is not retired and they're getting commissioned income, some months they may make 20,000 and some months they may might make zero. 121 00:10:27,178.73232059 --> 00:10:29,668.73232059 We want a larger emergency reserve for someone like that. 122 00:10:29,668.73232059 --> 00:10:35,8.73232059 We wanna make sure that they have enough cash, far more cash than somebody who is working for. 123 00:10:35,288.73232059 --> 00:10:43,718.73232059 A secure job as a teacher or, you know, a healthcare provider where they know that their job is very little chance of risk and they have consistent salary. 124 00:10:44,238.73232059 --> 00:10:48,768.73232059 For retirees, we do like to push a little bit more towards the nine to 12 months. 125 00:10:48,828.73232059 --> 00:10:59,568.73232059 Having a little bit of higher cash reserves gives them the comfort level of knowing that no matter what's going on in the environment, the market environment, that they have enough cash to pay those basic bills. 126 00:11:00,710.52853184 --> 00:11:09,260.52853184 So Ryan, here's a, here's another question, and this is really on the other end of the scale and it's actually a question we've heard in meetings many times. 127 00:11:09,650.52853184 --> 00:11:21,480.52853184 So what if I had a ton of money, say like half a million dollars in, in IRA or, my Schwab brokerage account? Wouldn't that count as my emergency reserve? Yeah. 128 00:11:21,480.52853184 --> 00:11:26,160.52853184 I actually heard that about a week ago where somebody said, why do I need an emergency reserve? I have you. 129 00:11:26,490.52853184 --> 00:11:30,450.52853184 Right, and they mean us and the money that they have invested with us. 130 00:11:30,660.52853184 --> 00:11:40,570.52853184 And although, I understand that, specifically we'll talk about investments in a future podcast, but in a diversified portfolio, some of that money would be cash or cash equivalents. 131 00:11:40,910.52853184 --> 00:11:48,410.52853184 It is not the same as an emergency reserve because it is not li it is not liquid in the sense that they can have it as quickly as we'd like to see them have it. 132 00:11:48,980.52853184 --> 00:11:50,300.52853184 And the short answer is no. 133 00:11:50,300.52853184 --> 00:11:52,460.52853184 Your investments are not your emergency or reserve. 134 00:11:53,150.52853184 --> 00:11:56,120.52853184 Investments are designed for a specific strategy. 135 00:11:56,180.52853184 --> 00:12:07,970.52853184 There's, even if you are in retirement and you're taking distributions from your investments, we design them in a specific pattern so that there's a certain amount of cash in that portfolio for distributions. 136 00:12:08,360.52853184 --> 00:12:13,160.52853184 And then the rest of the money is designed for different things specifically to grow over time. 137 00:12:13,700.52853184 --> 00:12:16,880.52853184 And if you're coming to us on a regular basis and needing to draw. 138 00:12:18,140.52853184 --> 00:12:28,400.52853184 15,000, 20,000, $30,000 for emergencies that come up that are unforeseen, that is dramatically altering the way we are going to do our asset allocation. 139 00:12:28,850.52853184 --> 00:12:31,880.52853184 Really, it becomes a problem because of the market volatility. 140 00:12:31,920.52853184 --> 00:12:41,490.52853184 The accounts themselves are not stable because a portion of the accounts may be stable, but there's another portion that's gonna be really volatile and too many emergencies. 141 00:12:41,580.52853184 --> 00:12:47,910.52853184 Like the case, of our story earlier with Susan needing to take money in February for her car and the furnace at the same time. 142 00:12:48,310.52853184 --> 00:12:54,650.52853184 If that just happened to be in a bad market environment, we're going to have a problem in our portfolio that's gonna cause a rebalance. 143 00:12:55,50.52853184 --> 00:12:56,580.52853184 And that's not something that we're gonna wanna do. 144 00:12:56,580.52853184 --> 00:13:05,940.52853184 We're not gonna wanna sell stocks, we're not gonna want to, even if we take the money from bonds or cash equivalents, ultimately we're gonna have to rebalance that portfolio and sell stocks at a lower price, and we're not gonna want to do that. 145 00:13:06,120.52853184 --> 00:13:08,100.52853184 That's why that emergency reserve's important. 146 00:13:08,370.52853184 --> 00:13:12,570.52853184 It should be stable, and it should be accessible at all times, regardless of the market conditions. 147 00:13:13,163.86186517 --> 00:13:13,553.86186517 Okay. 148 00:13:13,613.86186517 --> 00:13:15,173.86186517 So yeah, that makes sense. 149 00:13:15,233.86186517 --> 00:13:23,333.86186517 So even if someone has a large investment portfolio, I guess they would still need a cash reserve that's totally separate, just ready for the unexpected. 150 00:13:23,627.19519851 --> 00:13:24,197.19519851 Exactly. 151 00:13:24,197.19519851 --> 00:13:25,7.19519851 And think of it like this. 152 00:13:25,100.52853184 --> 00:13:32,60.52853184 Your investments are the engine of your plan, but your emergency reserve like insurance are the brakes in your airbags, right. 153 00:13:32,780.52853184 --> 00:13:36,650.52853184 We hope you don't need them nobody ever buys fire insurance on their home. 154 00:13:36,650.52853184 --> 00:13:38,270.52853184 And our homeowner's insurance fire is covered. 155 00:13:38,840.52853184 --> 00:13:45,380.52853184 I have never met somebody who said every to me, man, every year I'm paying for this fire insurance and my house has never burned down. 156 00:13:45,380.52853184 --> 00:13:48,200.52853184 I can't believe I'm wasting my money on this fire insurance. 157 00:13:48,530.52853184 --> 00:13:50,690.52853184 You know, I wish my house would just burn down so I could use it. 158 00:13:51,80.52853184 --> 00:13:55,10.52853184 No, it's there in case we need it, but we don't ever want to use it. 159 00:13:55,620.52853184 --> 00:13:58,771.52853184 We hope we don't need them, but when you do, you'll be glad that they're there. 160 00:13:59,481.52853184 --> 00:14:05,181.52853184 All right, so we've got the how much covered, so now let's talk about where to actually put the money. 161 00:14:05,531.52853184 --> 00:14:12,8.19519851 Brian, do you recommend some, like a specific kind of account? Does FDIC mean anything to you? Sure. 162 00:14:12,168.19519851 --> 00:14:13,68.19519851 And yes, it does. 163 00:14:13,168.19519851 --> 00:14:16,288.19519851 Essentially what we recommend is keeping your emergency reserve. 164 00:14:16,498.19519851 --> 00:14:19,318.19519851 We like to see it in a high yield savings account. 165 00:14:19,898.19519851 --> 00:14:25,538.19519851 It can be attached to your checking account or it can be held at a completely separate institution. 166 00:14:25,928.19519851 --> 00:14:29,798.19519851 The interest rate is not as important, however. 167 00:14:30,424.86186517 --> 00:14:34,144.86186517 Once we have FDIC insurance and let's talk about what that is. 168 00:14:34,408.19519851 --> 00:14:53,188.19519851 FDIC insurance stands for Federal Deposit Insurance Corporation, which basically means the federal government is backing up our cash, right? If the bank were to fail and we have $250,000 per depositor or less, then the government will step in and replenish our cash, so we won't lose any money. 169 00:14:53,728.19519851 --> 00:14:54,383.19519851 That's to us. 170 00:14:55,33.19519851 --> 00:14:58,243.19519851 Safe, right? That satisfies that safe component. 171 00:14:58,693.19519851 --> 00:15:03,673.19519851 So when we're investing, we don't necessarily need FDIC insurance, but we want federal protection. 172 00:15:04,33.19519851 --> 00:15:07,393.19519851 And there are other types of accounts that have federal protection. 173 00:15:07,393.19519851 --> 00:15:10,903.19519851 If we buy treasury bills or something like that will also be federal protection. 174 00:15:10,903.19519851 --> 00:15:13,753.19519851 If we buy, I bonds, EE bonds, that's federal protection. 175 00:15:14,303.19519851 --> 00:15:18,533.19519851 But typically we want to find an FDIC insured savings account. 176 00:15:19,943.19519851 --> 00:15:23,273.19519851 FDIC is important 'cause it means your money's protected up to the legal limit. 177 00:15:23,618.19519851 --> 00:15:39,248.19519851 And we know that we're not gonna worry about paying failure, okay? So once we have the FDIC insurance, once we have an account that we can access and get the money relatively quickly, then you know, beyond that, the interest rate is something that we can look for. 178 00:15:39,518.19519851 --> 00:15:54,123.19519851 But getting an extra half a percent on your money, even if you're talking about 50 or a hundred thousand dollars, it's not a tremendous amount of money that it's not so much money that we would want to sacrifice the safety, the liquidity, and the accessibility of our money. 179 00:15:54,183.19519851 --> 00:15:55,803.19519851 Those are the main priorities. 180 00:15:55,803.19519851 --> 00:15:59,103.19519851 But once we have those three things, then we can start looking for a better rate. 181 00:15:59,509.86186517 --> 00:15:59,869.86186517 Okay. 182 00:15:59,959.86186517 --> 00:16:05,209.86186517 Yeah, that's something that I really think people overlook, especially that FDIC insured portion. 183 00:16:05,823.19519851 --> 00:16:09,603.19519851 Just because your account says savings doesn't mean the money's automatically safe. 184 00:16:10,428.19519851 --> 00:16:17,823.19519851 If you've got more than the FDIC coverage limit at one bank, which, Ryan had mentioned before, something wise to think about is splitting it up. 185 00:16:18,643.19519851 --> 00:16:19,543.19519851 Yeah, it's a good point. 186 00:16:19,543.19519851 --> 00:16:26,373.19519851 We do see that all the time, especially people who get windfall cash, whether it be from the sale of a house or the sale of a business. 187 00:16:26,493.19519851 --> 00:16:33,93.19519851 And what they do is they'll take all that money, take a million dollars or so, and put it into a checking account or a savings account and say, no, my money's safe. 188 00:16:33,93.19519851 --> 00:16:33,723.19519851 It's in the bank. 189 00:16:34,233.19519851 --> 00:16:35,763.19519851 I don't care what bank you're with. 190 00:16:35,913.19519851 --> 00:16:38,763.19519851 Banks do fail and they have failed. 191 00:16:38,763.19519851 --> 00:16:43,473.1951985 Very recently, we had two pretty large banks fail very recently in 2022. 192 00:16:43,919.8618652 --> 00:16:50,759.8618652 The $250,000 limit, as for 2025 per depositor is just something to keep an eye on. 193 00:16:50,759.8618652 --> 00:16:52,709.8618652 If it's a joint account, you have 500,000. 194 00:16:53,249.8618652 --> 00:16:59,799.8618652 If it's, if you have more cash than that in the short term, just split it up, invest it in different banks, just to make sure that money's there. 195 00:17:00,459.8618652 --> 00:17:11,649.8618652 We don't want you dipping into that money for things like the big screen TV or vacation or holiday shopping, this labeled emergency fund, and really is only touched when it's an emergency. 196 00:17:11,973.8113865 --> 00:17:16,313.8113865 And for those in their twenties or thirties, someone my age this does sound intimidating. 197 00:17:16,703.8113865 --> 00:17:22,293.8113865 Maybe you're just getting started and the idea of saving even six months of expenses feels way outta reach. 198 00:17:22,803.8113865 --> 00:17:23,433.8113865 Start small. 199 00:17:24,73.8113865 --> 00:17:26,503.8113865 Yeah, and I can't emphasize this enough. 200 00:17:26,583.8113865 --> 00:17:33,913.8113865 When we start talking with people, just even people outta college, I never tell you when you take your first job, don't invest in a 401k. 201 00:17:34,33.8113865 --> 00:17:36,663.8113865 You know, that, that's always something that we should start doing. 202 00:17:37,173.8113865 --> 00:17:43,983.8113865 But really the first main priority in your financial plan, if you're just starting out, is to get this emergency reserve built up and. 203 00:17:44,423.8113865 --> 00:17:47,353.8113865 We don't need you to, eat the whole elephant in one bite. 204 00:17:47,383.8113865 --> 00:17:49,903.8113865 You don't need to set aside three months worth of expenses. 205 00:17:50,303.8113865 --> 00:17:51,953.8113865 It could take you five years to do that. 206 00:17:51,953.8113865 --> 00:18:00,103.8113865 And we don't want to see you sacrifice your lifestyle or sacrifice, saving for retirement simply because you're billing this emergency reserve. 207 00:18:00,493.8113865 --> 00:18:02,263.8113865 But we do say. 208 00:18:02,678.8113865 --> 00:18:06,8.8113865 Get yourself a thousand dollars as quick as possible. 209 00:18:06,68.8113865 --> 00:18:15,798.8113865 If you can get a thousand dollars saved in an emergency reserve, I don't care what you have to do, if you have to hold a yard sale, if you gotta drive an Uber, don't eat out for a month or two. 210 00:18:16,98.8113865 --> 00:18:21,498.8113865 Do whatever you can to get a thousand dollars in a savings account as quick as possible. 211 00:18:21,528.8113865 --> 00:18:23,868.8113865 That is your start to your emergency reserve end. 212 00:18:24,888.8113865 --> 00:18:43,818.8113865 Listen, if you are 22, 23, even 30 years old, if you can get a thousand dollars set aside, it will cover, or how do I say this, protect you against probably 70 to 80% of the major issues in life that may come up, right? You get a flat tire, car gets towed to the mechanic and they gotta replace your tire. 213 00:18:44,178.8113865 --> 00:18:45,588.8113865 You need that car to get to work. 214 00:18:45,618.8113865 --> 00:18:49,158.8113865 You need that car to earn your living, so you gotta be able to pay for it. 215 00:18:49,658.8113865 --> 00:18:53,378.8113865 We don't want you to have to put that on a credit card or dip into your 401k to pay for it. 216 00:18:53,648.8113865 --> 00:19:04,88.8113865 If it's a $500 tow and tire, you have that a thousand dollars to cover that emergency, get the tire fixed, and then get that emergency reserve back up to a thousand bucks. 217 00:19:04,238.8113865 --> 00:19:09,8.8113865 And then once you have that at a thousand dollars, then set aside a certain amount of money. 218 00:19:09,53.8113865 --> 00:19:10,283.8113865 Every single paycheck. 219 00:19:10,283.8113865 --> 00:19:18,713.8113865 I don't care if it's 20 bucks, I don't care if it's 50 bucks, set aside a certain amount of money and continue to add to that thousand bucks until you get to three months worth of living expenses. 220 00:19:19,250.4780532 --> 00:19:21,710.4780532 And the sooner you start the more gradually you can get it to grow. 221 00:19:21,710.4780532 --> 00:19:25,430.4780532 And frankly, here's the thing, the more confidence that you'll have. 222 00:19:25,785.4780532 --> 00:19:30,315.4780532 In your financial life that you can now go out and do other things. 223 00:19:30,315.4780532 --> 00:19:33,135.4780532 We always like to say we're building your financial empire. 224 00:19:33,195.4780532 --> 00:19:36,555.4780532 Like when you're 22, 23, 24, you're building a financial empire. 225 00:19:36,705.4780532 --> 00:19:40,425.4780532 When you're building an empire, and the first thing you do is you've got your castle. 226 00:19:40,935.4780532 --> 00:19:46,545.4780532 First thing you wanna do is protect it, right? You can't go out and conquer other worlds until you've protected your castle. 227 00:19:46,945.4780532 --> 00:19:49,345.4780532 Your emergency reserve is your financial moat. 228 00:19:49,525.4780532 --> 00:19:50,965.4780532 So get that moat dug. 229 00:19:50,995.4780532 --> 00:19:53,755.4780532 It doesn't have to be the biggest moat in the world, but get something dug. 230 00:19:54,395.4780532 --> 00:20:00,605.4780532 Save that a thousand bucks and then set up regular recurring savings so that you're growing that over time. 231 00:20:01,395.4780532 --> 00:20:04,95.4780532 And that's pretty relieving for someone, especially my age. 232 00:20:04,95.4780532 --> 00:20:13,135.4780532 And I'm sure you can remember Ryan, just a thought of saving something like $10,000 when you're right outta college and you have bills, car loans, student loans. 233 00:20:14,50.4780532 --> 00:20:20,890.4780532 Social life, it just, it seems a bit overwhelming and that thousand dollar buffer to begin, really relieves the tension. 234 00:20:21,880.4780532 --> 00:20:22,900.4780532 Yeah, absolutely. 235 00:20:22,900.4780532 --> 00:20:29,740.4780532 And when I was your age, ZI think I was working on inventing fire, but it was, it was a really, really valuable technology to me. 236 00:20:29,740.4780532 --> 00:20:30,670.4780532 Uh, no. 237 00:20:30,670.4780532 --> 00:20:33,640.4780532 All kidding aside, we, you know, I, I, I know what it was like. 238 00:20:33,640.4780532 --> 00:20:36,10.4780532 I had those student loans, I had the car loan. 239 00:20:36,260.4780532 --> 00:20:37,70.4780532 I was paying, all these. 240 00:20:37,875.4780532 --> 00:20:41,565.4780532 Bills for the first time in my life because before that my parents had paid them. 241 00:20:41,875.4780532 --> 00:20:44,215.4780532 And yeah, I had a job, but I wasn't making very much money. 242 00:20:44,395.4780532 --> 00:20:47,425.4780532 So understanding, start small, start with that. 243 00:20:47,425.4780532 --> 00:20:48,235.4780532 A thousand dollars. 244 00:20:48,835.4780532 --> 00:20:50,755.4780532 So let's wrap up with a few action steps here. 245 00:20:51,55.4780532 --> 00:20:54,255.4780532 First and foremost, let's go back to our retirees here. 246 00:20:54,255.4780532 --> 00:20:56,655.4780532 Calculate your essential monthly expenses. 247 00:20:56,655.4780532 --> 00:20:59,925.4780532 So then things like your housing, your food, your medical, your transportation. 248 00:21:00,295.4780532 --> 00:21:12,800.4780532 You don't need to calculate your income, right? We don't need to calculate what do I earn every month? Because if you were to lose your job, or if you had an emergency come up you really would only focus on the essentials at that point. 249 00:21:12,800.4780532 --> 00:21:17,90.4780532 If you're out of work, you're not concerned about paying income taxes, which would come outta your paychecks. 250 00:21:17,90.4780532 --> 00:21:19,860.4780532 So, look At your essential living expenses. 251 00:21:20,400.4780532 --> 00:21:27,540.4780532 Multiply them by anywhere from three to 12, right? So that's three to 12 months worth of those expenses Now. 252 00:21:28,615.4780532 --> 00:21:31,195.4780532 I'm not gonna tell you what is the right number for you. 253 00:21:31,475.4780532 --> 00:21:41,225.4780532 If you think about this, if you have a secure job, if you're comfortable in a lot of other areas of your financial life, maybe three months of emergency reserve is plenty for you. 254 00:21:41,705.4780532 --> 00:21:53,45.4780532 And if you're retired or if you have a variable stream of income, if you're retired and you're counting heavily on your investments to pay you for your lifestyle, probably 12 months is better for you. 255 00:21:53,465.4780532 --> 00:21:53,765.4780532 Right. 256 00:21:54,95.4780532 --> 00:22:05,125.4780532 If you're a salesperson, if you have inconsistent income, if you are dual income that are high income and high probability of losing a job, 12 months is probably a better fit for you. 257 00:22:06,205.4780532 --> 00:22:07,345.4780532 Review your current accounts. 258 00:22:07,345.4780532 --> 00:22:14,85.4780532 So how close are you? Are you there yet? Are you way off? Open a high yield FDIC insured savings account. 259 00:22:14,760.4780532 --> 00:22:22,680.4780532 So that you have an, if you don't already have it, that way you, you have that account ready to go, and you've got your target now that you've set and you're ready to go. 260 00:22:23,250.4780532 --> 00:22:24,660.4780532 Make sure those funds are separate. 261 00:22:24,660.4780532 --> 00:22:26,820.4780532 These are not part of your checking account. 262 00:22:26,820.4780532 --> 00:22:28,620.4780532 It's not part of your investment accounts. 263 00:22:29,220.4780532 --> 00:22:35,730.4780532 We do not want this to be money in and out, right? Money in is your paycheck and then money outta the bills that you pay. 264 00:22:35,880.4780532 --> 00:22:39,120.4780532 This is a completely separate account, and if you're just starting out. 265 00:22:39,825.4780532 --> 00:22:41,745.4780532 Make sure that you set up automatic transfers. 266 00:22:41,955.4780532 --> 00:22:52,235.4780532 And honestly, even if you're not starting out, if you are, if there's a gap to your emergency reserve comfort level save, save regularly, you can pull money from other investments if need be. 267 00:22:52,505.4780532 --> 00:22:59,925.4780532 We don't really want to take money out of IRAs and pay taxes to them, put it in cash in emergency reserve, but, maybe save a little bit each month or each. 268 00:23:00,350.4780532 --> 00:23:07,380.4780532 Pay period, to start building that up and then just review annually to adjust your life expenses, will change over time. 269 00:23:07,380.4780532 --> 00:23:09,960.4780532 So you want to be able to adjust your emergency reserve as needed. 270 00:23:10,517.1447198 --> 00:23:15,947.1447198 And for anyone just starting out, it's really important to especially just celebrate the milestones. 271 00:23:15,997.1447198 --> 00:23:19,57.1447198 First a thousand dollars in reserves, that's a huge deal. 272 00:23:19,637.1447198 --> 00:23:21,947.1447198 Keep going and your future self will, thank you. 273 00:23:22,397.1447198 --> 00:23:24,107.1447198 If they don't, I definitely will. 274 00:23:24,882.1447198 --> 00:23:26,472.1447198 Yeah, I agree. 275 00:23:26,472.1447198 --> 00:23:28,152.1447198 We need to celebrate the little wins for sure. 276 00:23:28,152.1447198 --> 00:23:29,962.1447198 And what, let's be clear about that. 277 00:23:29,962.1447198 --> 00:23:35,972.1447198 I don't want you to hit the a thousand dollars mark and then spend $200 on a bottle of Dom Perignon to celebrate and toast. 278 00:23:36,272.1447198 --> 00:23:39,902.1447198 But it's those little celebrations, go out and do something nice for yourself. 279 00:23:40,2.1447198 --> 00:23:41,142.1447198 You'll be glad that you did. 280 00:23:41,682.1447198 --> 00:23:48,222.1447198 Again, emergency reserves are not the most talked about part of your financial life, but they're one of the most impactful, they're foundational. 281 00:23:48,532.1447198 --> 00:23:53,832.1447198 When it comes to the old builder adage is when you're building a house, the first two things you wanna make sure are in place. 282 00:23:53,832.1447198 --> 00:23:57,642.1447198 So, a good foundation and a good roof emergency reserves are the good foundation. 283 00:23:57,642.1447198 --> 00:24:05,357.1447198 The rest you can build up over time, and when life throws you something unexpected, having the right cash buffer let's you stay calm, stay protected, and stay on course. 284 00:24:06,392.8686102 --> 00:24:09,812.8686102 Thank you very much for joining us on their retirement GPS Podcast. 285 00:24:09,862.8686102 --> 00:24:14,602.8686102 Be sure to subscribe, turn on post notifications and leave us a good review if you enjoyed us. 286 00:24:14,692.8686102 --> 00:24:17,362.8686102 If you didn't enjoy us, don't leave us any review at all. 287 00:24:17,722.8686102 --> 00:24:18,652.8686102 Thanks a lot guys. 288 00:24:18,652.8686102 --> 00:24:25,372.8686102 Next time we'll be diving into investing in retirement, which is of course one of the hottest topics, the things that most people want to talk about. 289 00:24:25,582.8686102 --> 00:24:32,552.8686102 How to create income, manage the volatility, invest with intention, as you transition into the next phase of your life. 290 00:24:32,582.8686102 --> 00:24:33,332.8686102 And until then. 291 00:24:33,722.8686102 --> 00:24:36,722.8686102 Stay intentional, Zane, and keep your retirement on chorus. 292 00:24:36,722.8686102 --> 00:24:37,502.8686102 Thanks a lot guys. 293 00:24:37,682.8686102 --> 00:24:38,222.8686102 Thanks you guys. 294 00:24:39,981.6034587 --> 00:24:50,121.6034587 Thank you for listening to retirement GPS navigated by Ziner To explore today's topic further, visit our blog mile [e-mail] 295 00:24:50,121.6034587 --> 00:24:56,991.6034587 slash blog, where we offer detailed strategies, examples, and downloadable tools to support your retirement journey. 296 00:24:57,351.6034587 --> 00:25:05,601.6034587 Follow us on LinkedIn, Instagram, and Facebook at Synergy Retirement Planning for weekly insights, checklists, and planning reminders. 297 00:25:05,931.6034587 --> 00:25:07,401.6034587 If you found this episode helped. 298 00:25:07,791.6034587 --> 00:25:08,751.6034587 Please subscribe. 299 00:25:08,901.6034587 --> 00:25:13,11.6034587 Leave a five star review and share it with someone planning for their future. 300 00:25:13,251.6034587 --> 00:25:17,601.6034587 Until next time, keep navigating toward a confident retirement. 301 00:25:18,231.6034587 --> 00:25:22,101.6034587 This podcast is for informational purposes only and is not intended as investment, legal or tax advice. 302 00:25:22,101.6034587 --> 00:25:25,491.6034587 Listeners should consult their own financial tax and legal advisors before making any decisions. 303 00:25:25,551.6034587 --> 00:25:29,121.6034587 Is Energy Retirement Planning is registered Investment advisor located in Red Bank, New Jersey.