Shortfall against your goal
$40,000 short of your 6-month goal, in today's dollars.
Your $20,000 in cash and savings covers about 2 months of essential spending. Your goal is 6 months.
A layoff, an illness or a gap between jobs can stop a paycheck with little warning, and the bills keep coming. The money you've set aside buys your household time.
How long the household's cash, savings and investments outside retirement could pay for essential spending if income stopped.
An emergency fund also gets the household through a large medical bill. Every health plan has an out-of-pocket maximum: the most you would pay for covered care in a plan year. Keeping more than that in savings means a serious illness or injury doesn't have to become debt on top of lost income.
How families protect against this. An emergency fund protects your household's bills while income is paused. It buys time to find the right next job rather than the first one.
How many months of essential spending would you want set aside?
We spread the saving to close the gap over 24 months.
Your goal: 6 months of essential spending set aside — $60,000 in today's dollars.
Where you are: $20,000 in cash and savings, enough for about 2 months — in today's dollars.
| $20,000 cash and savings ÷ $10,000 a month of essential spending | 2 months |
| 6 months × $10,000 a month | $60,000 goal |
| $60,000 goal − $20,000 you have | $40,000 gap |
All figures in today's dollars.
Coverage through work usually ends when the job does. If the income stopped because a job ended, Joe's life insurance and disability coverage through work and Jill's life insurance through work would usually end with it.
$40,000 short of your 6-month goal, in today's dollars.
Figures in today's dollars.
| If it happened… | The gap then |
|---|---|
| Today | $40,000 |
| In 5 years | $35,938 |
| In 10 years | $41,661 |
| In 25 years (when Joe would be 60) | $64,907 |
These figures include future price rises. We assume spending goes up 3% a year, your savings keep up with prices, and you don't add to them.
Each one shows how your result would change if something were different. They are not advice about what you should do.
Try your own what-if
If your income stopped for 6 months
Your household would need about $60,000 for essentials over those months. Your cash and savings would cover about 2.0 months — $40,000 short.