Emergency Savings Calculator
Having adequate emergency savings can make unforeseen unemployment, auto repairs, medical emergencies, property damage and even legal issues more manageable. With adequate emergency savings, you can focus on how to best meet your family’s needs, rather than worrying about finding the money to handle these difficult situations. This calculator helps you determine how much emergency savings you may need, and how you can begin saving toward this important goal.
While this calculator can provide you with some insight, it was developed to be very general and may not fit everyone’s personal situation. Please feel free to contact our office after using this calculator so that we can perform a more thorough analysis.
- Emergency medical
- Total amount you may need in a medical emergency. Don’t include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency legal
- Emergency legal costs such as legal defenses for civil suits or criminal accusations. Don’t include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency auto repair
- Emergency auto repair costs. Don’t include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency property damage
- Total amount you may need in an emergency involving damage to property such as your home. Don’t include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency other
- Any other amounts that may be required in an emergency not included in medical, legal, auto or property categories.
- Insurance deductible medical
- The amount you are required to pay for medical expenses before your insurance coverage begins. Some medical insurance only covers a portion of your expenses after your deductible has been paid. If you insurance does not cover 100% of your expenses after you have paid your deductible, you may wish to enter your total maximum out of pocket costs here, which may be considerably higher than your deductible alone.
- Insurance deductible auto
- The amount you are responsible to pay on auto insurance claims before your insurance covers any expenses. Deductibles for auto insurance commonly range from $100 to $500.
- Insurance deductible property
- The amount you are responsible to pay on property claims, such as storm damage to your home, before your insurance covers any expenses. Deductibles for home or property insurance commonly range from $250 to $1000.
- Insurance deductible other
- Any other insurance deductibles that may be required in your emergency fund.
- Monthly living expenses
- Your total monthly living expenses. This amount should be your total expenses, not your total monthly income. Remember to include your home or rent payments, food, clothing, gas, phone and other monthly expenses. This amount does not need to include monthly savings or contributions to retirement accounts.
- Months of unemployment
- The number of months you expect it will take to find a new employer if you become unemployed. The time it takes to find a new job can range anywhere from one month to more than a year. It is important to be realistic in your unemployment estimate. Covering living expenses if you become unexpectedly unemployed can be your largest emergency expense.
- Amount currently saved
- Total you currently have saved that should be included in this analysis.
- Amount to save per month
- The amount you will contribute each year to your emergency savings.
- Rate of return
- This is the annually compounded rate of return you expect from your investments before taxes. The actual rate of return is largely dependent on the type of investments you select. The S&P 500 for the ten years ending on December 31st, 2011 had an annual compounded rate of return of 2.92%, including reinvestment of dividends. From January 1970 through the end of 2011, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.01% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
Since emergency savings may need to be accessed at any time, most people should use a conservative interest rate similar to a saving account and not rely on more risky investments such as stock or bonds.
- Federal tax rate
- Your marginal federal tax rate. This calculator assumes that you pay federal taxes on any interest earned at this rate. This calculator also assumes that your taxes are taken out of your savings as they are earned, instead of at the end of the year.
- State tax rate
- Your marginal state tax rate. The assumptions for state taxes are the same as those for federal. This calculator assumes that you pay state taxes on any interest earned. This calculator also assumes that your taxes are taken out of your savings as they are earned, instead of at the end of the year.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Calculators are provided by an independent third party and are being made available to you as self-help tools for your independent use and are not intended to provide investment advice or be representative of actual results. We do not guarantee their applicability or accuracy in regards to your individual circumstances. The determinations made by these calculators should not be construed as guarantees or projections. Moreover, the reasonableness of certain information may change over time because of changes in tax law, investment trends and your personal circumstances. The information contained here is based on current law and has been obtained from sources believed to be reliable, but we do not guarantee its accuracy. Investment results can vary considerably depending on the type of securities involved, general market conditions and other factors. It is important that you periodically review and update your plans. Raymond James does not provide tax or legal advice. You should contact your tax or legal advisor concerning your particular situation. All investments carry a degree of risk, and past performance is not a guarantee of future results.