Emergency savings is essential in building a sound and resilient financial foundation. Life is uncertain – people encounter unexpected spending shocks such as having to fix their car or income shocks from losing their jobs or reduced hours. If there aren’t funds set aside to navigate these unfortunate circumstances, people often tap their retirement portfolios to generate the needed funds. Prematurely taking money out of retirement savings accounts can have a dire consequence in achieving a successful retirement outcome. How much to set aside in an emergency savings account will vary by household – income level, unique personal circumstances and comfort level. As a general guide, consider setting aside 2-3 months of pay for those working and 3-6 months of income for those retired. Retirees encounter more spending shocks and in larger amounts than workers, likely due to unpredictable costs like healthcare. Lower income households need larger emergency savings because the shocks they encounter can be large relative to their baseline “normal” spending.