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Editor’s Note: This story originally appeared on NewRetirement.
With smart money management, global economic (and personal) financial crises can be just a temporary setback — not a long-term disaster. However, bridging to that secure future may be difficult when you experience setbacks.
You may need to consider immediate sources of emergency money or income.
You will see that finding the best source of emergency money for you is dependent on a wide variety of interdependent variables. We firmly believe that running alternate scenarios using the NewRetirement Retirement Planner can help you make better decisions for your short and long-term financial health.
Following are several ideas for emergency money in these stressful times along with an assessment of the pros and cons of each source of funding.
None is going to be perfect. All of these financial transactions have costs associated with them. However, we rate each emergency money source as either:
- Not the best idea
- Proceed cautiously
- Go for it
Take a look.
1. Tapping Emergency Funds and Cash Accounts
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Rating: Go for it
Most personal finance experts advise that all households have access to enough cash to fund at least six months’ worth of living expenses at all times. (And, if you are retired already, then you ideally have access to one or two years’ worth of needed portfolio withdrawals.)
If you have this money, a big congratulations to you. Unfortunately, that is not a goal that most Americans have followed. According to Bankrate, only 39% of people can cover a $1,000 setback using their savings.
Pros of Using Your Cash Fund: You saved it for exactly this reason.
Cons: It can be stressful to deplete this cushion. Proceed with spending cautiously and be ready to replenish it when possible.
2. Starting Social Security Earlier Than You Had Intended
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Rating: Not (usually) the best idea …
If you are at or near retirement age, you have probably already given some thought about when to start Social Security retirement benefits.
However, you may now be rethinking your decision-making and weighing the pros and cons of starting earlier.
While the conventional wisdom is to almost always opt to delay the start of retirement benefits until your maximum benefit amount is achieved, you may be seduced by the idea of starting now.
Pros: Social Security is a relatively easy way to boost your monthly income. (Although it does take about four to six …….