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Retirement or Emergency Account- Which Should Be Priority?

Updated: Jul 24

In a recent Ask Bob email, I received the following question:


“I am trying to achieve a balance between saving for emergencies and saving for retirement. How do you strike a balance, and do you emphasize one versus the other?”


We save money for all types of reasons. Probably the top 2 ideas come down to retirement and saving for that unforeseen emergency. Which is more important? Should one be prioritized over another?


Consider the story of Mary:


Mary was a saver. It was a priority, and she diligently saved for many years. Everything was going great for her retirement account. She was on track to retire when and how she wanted to. Then, reality arrived when her home air conditioning unit went out. She was already cutting it close with the end of the month being days away. Although she was an excellent retirement saver, she had very little in her emergency account. What is she going to do?

First and foremost, developing the habit of saving is crucial for positioning yourself for a lifetime of success. However, saving can be counter-productive. All of the conservation for the future into accounts you can’t touch will do you no good when the short-term emergency arrives.


Funding an emergency account is far more critical than allocating your savings towards retirement money you cannot touch now.


After all, if you don’t have an emergency account established, the credit card and debt end up being the only alternative. Build up the emergency account first, then let the future take care of itself.


The future isn’t as important if you can’t take care of the short-term.

We save money for all types of reasons. Probably the top 2 reasons come down to retirement and saving for that unforeseen emergency. Which is more important? Should one be prioritized over another?