Answer Book question
Twelve to twenty-four months of expenses, plus a separate medical reserve sized to the gap in health cover. Retirees cannot earn their way out of a bad year, so the buffer must be larger than a working person's. It sits in sweep-in FDs and a liquid fund, not in the income-producing corpus.
Twelve to twenty-four months of expenses, plus a separate medical reserve sized to the gap in health cover. Retirees cannot earn their way out of a bad year, so the buffer must be larger than a working person's. It sits in sweep-in FDs and a liquid fund, not in the income-producing corpus.
A retired couple keeps three months of cash and everything else in an SWP fund. A market fall and a hospitalisation arrive in the same year. They redeem units at the worst time. Two years of cash would have let the fund recover.
The buffer has two jobs: ride out market falls without selling, and absorb medical shocks. Size each separately.
Monthly expenses Health cover and its deductions Market exposure of the rest
Counting the income corpus as the emergency fund.
With KASP or a super top-up, the medical reserve can be smaller. Without, it must be ₹3–5 lakh at minimum.
Expenses ₹25,000/month → ₹3–6 lakh cash. Medical gap → ₹3 lakh. Total buffer ₹6–9 lakh outside the corpus.
With a government pension covering all expenses, the cash buffer can be smaller; the medical reserve still matters.
Size the two buffers Fund them before setting the withdrawal rate
What should stay in cash even if I am investing? What is an SWP?
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