Preparing for the Unexpected
As you think about your own retirement plans , it ’ s worth considering what you would do if you were to face a large expense you weren ’ t counting on , like an unexpected tax bill , a home or car repair or a major healthcare expense . For many retirees , the first call is to their broker to sell some stock – but selling stock can create its own problems , from tax implications to the potential of selling in a down market . It also decreases your retirement assets , and as we discussed , one of the top priorities for women in retirement should be preserving their wealth as long as possible .
One strategy to consider is increasing your liquidity . Liquidity is your ability to access cash when you need it . It ’ s often used to describe assets : Liquid assets like a money market account allow you to tap into cash easily , while illiquid assets like real estate or private equity cannot typically be converted so readily .
Emergency funds , home equity lines of credit , credit cards – when managed wisely – are all liquid funding sources that can be helpful in retirement , but fitting them into a sound financial strategy in retirement takes planning . ( As an example , if you wait until you ’ re retired to apply for a line of credit , you ’ re much more likely to get rejected , as you ’ ll have no income to support it .) Your financial advisor can advise you on your liquidity needs and what kinds of funding sources are appropriate for your circumstances in retirement .
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