A good pension can feel pretty solid, but there’s always the possibility of lost income or other emergencies. What if your car dies, or one of you experiences a major medical event? Life has teeth, and it can bite you at any time. A good, old-fashioned rainy-day fund will keep you from going into debt when the unexpected happens.

I recommend an emergency fund of three to six months of expenses. Put it in a good money market account with check writing privileges and a decent interest rate. That way, your money will work for you. With a solid, steady income you can lean toward the three-month side. Otherwise, I’d save up five or six months of expenses.

A fully funded emergency fund is great Murphy repellent, Karen. It will make you both feel better, plus it can turn a disaster into nothing more than a minor inconvenience! --Dave