Any point at which an Emergency Fund becomes unnecessary?

[Turn_the_Page]

Isn't all the talk about emergency fund really for those who are financially ignorant? Meaning most of us have figured this out to some degree. This being live below your means, invest prudently, etc etc. Most of us really don't need emergency funds because we're not so financially challenged that we can't handle it when our refrigerator fails or whatever.

We don't have anything called our emergency fund, but we do have $200k sitting in savings/checking/taxable cash equivalents. Too much for my liking, but it helps the DW sleep better.

 

[Independent]

I'm over 60 so I can access IRAs without tax penalty.

No need for a separate emergency fund.

 

[Markola]

What Senator said.

If the #%*^ really hits the fan, I'd tap every bit of our net worth and credit sources as needed to address it. IOW, it's ALL emergency fund, plus a $2 million umbrella liability policy. This is because:
A) I prefer to stay fully-invested, and
B) I manage the "emergencies" (really just temporary cash flow needs) we've had to date with an unsecured line of credit. The pain of periodically having some LOC debt motivates me pay it off out of salary earnings ASAP in a way that spending some of my excess cash then paying my lazy self back would not. It's all psychological.

 

[tripods68]

We have a 30K of EF in our bank in MM account which is about 6 months of monthly expenses.

We do not touch this at all, unless it meets:

Medical emergency

or

death

We keep a minimum of about 5k in checking and another $5K in savings account to pay for other type of expenses outside regular monthly bills like oil change, tire replacements, or AC compressor at 100 degree heat. Anytime we have expenses that we cannot absorb with our checking balance we use our savings to pay for it--like a major car repairs (timing belt or a new a garage opener/labor installation). But that's only happen one or maybe twice a year (can't remember really). Our checking account fund mostly 98% of our monthly needs/expenses.

We also have another 5K in Vanguard (Wellington fund) that we add $300 weekly (automatic setup) that fund family vacation and daughter's catholic school tuition. We just wrote a check last month for next year's school year. We save a year in advance so we can always pay the entire school year in lump sum when its due.

 

[YVRRocketSurgery]

We're still working. As kind of a default, our emergency fund ends up being the minimum account balances of two shared "working" accounts which keep the accounts fee free for us. The minimum balances could cover our core expenses for 6-9 months.

One additional strategy I'd like to employ is setting up a line of credit against the house which could give us a little more flexibility if we end up in a bind and are short on liquidity.

 

[Danmar]

The most likely emergency for a 65 year old retired guy is medical related. Have to go to US for open heart surgery overnight. How much could it be? Maybe 200-500k Max. We have that covered.

 

[ESRwannabe]

I no longer have an emergency fund. I used to save up 6 months to a year's worth of living expenses, which I would always ball park around $2k (its actually around $2,333 but $2k is close enough).

I stopped because I have monthly income from my taxable brokerage account of around $1,800 from multiple CEFs. Once I get that income to $2,333 (i.e. $28k) I will be theoretically financially independent.

Before I would retire I'd like to have 3 years living expenses in cash. So I'll have an emergency fund again at some point.

 

[audreyh1]

The most likely emergency for a 65 year old retired guy is medical related. Have to go to US for open heart surgery overnight. How much could it be? Maybe 200-500k Max. We have that covered.

That kind of money doesn't need to be paid out all at once.

And that assumes you don't have insurance.

It's hard to imagine immediate emergencies that $20K would cover more than adequately and give you time to unwind non-cash assets.

 

[Danmar]

That kind of money doesn't need to be paid out all at once.

And that assumes you don't have insurance.

It's hard to imagine immediate emergencies that $20K would cover more than adequately and give you time to unwind non-cash assets.

Generally agree. But most insurance in Canada would not pay for anything they think is elective or could be handled by the system in Canada. I'm thinking of something that is serious but for whatever reason might not be done right away in Canada. A short trip to the Cleveland clinic will have it done next day, but obviously will be expensive.

 

[kcowan]

The most likely emergency for a 65 year old retired guy is medical related. Have to go to US for open heart surgery overnight. How much could it be? Maybe 200-500k Max. We have that covered.

I find emergency coverage is excellent and timely. Elective surgery is much worse and, if you don't want to endure a year of pain, then paying seems to be the best option. One of our rich friends decided to tough it out because the post-op recovery for the hip replacement would take too many months away from home.

And one of our friends is in the hospital on antibiotics awaiting her open heart surgery. She could be on home care but she is not in her neighborhood hospital and they refused to handle her as an outpatient (Richmond General). So she takes up a bed in St Pauls instead.