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Rainy Day SavingsProbably the biggest stumbling blocks that people encounter when trying to build an income for life is emergency expenditures. You don’t want to use your retirement fund as an ATM machine. So many people work hard to establish a nest egg that will carry them comfortably through retirement only to lose a good portion of it when an emergency comes up. Dipping into a retirement fund for things like emergency medical procedures, the death of a loved one, or other unexpected expenses can put you in a vulnerable position. If enough expenses come up, you can find yourself in a position where you have to return to work or depend on a child to survive.

Now, there are a couple of things you can do to protect yourself. First, get as many insurance policies as you possibly can. Life insurance, health insurance, property insurance – these will help you weather the storm without dipping into valuable retirement money. If a natural disaster strikes or someone gets injured on your property, good property insurance is your best protection. If you or your spouse is facing a medical emergency, health insurance will cover much of the cost. Life insurance, of course, can cover the cost of the funeral and provide additional resources that can help the spouse or children. That being said, insurance does come at a cost.

Another approach you can take is to build an emergency fund. Experts suggest building a cash cushion equivalent to six months of living expenses and placing it in a savings or other fairly liquid account. It’s important to have instant access to these funds in the event of an emergency. The larger the emergency fund, the better protected you will be. If you’re a younger boomer and believe that retirement is years away, an emergency fund can give you time to get back on your feet if you suddenly lose your job. If retirement is just around the bend, the fund will help keep your retirement fund safe.