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'Suddenly, our emergency fund didn't seem adequate'

As financial planners, we often see too many clients dipping into their retirement funds to cover the costs of surprise events like a medical issue or other unforeseen needs that may occur.

Time and again, I found myself telling clients to set aside money for the specific purpose of preparing for the unexpected. I was also convinced that my wife and I were adhering to this advice — little did we know that we were about to be put to the test.

In 2012, we had already purchased our first home, and were making a good double income. So, the natural next step was to grow our family. We thought it was going to be pretty straight forward. We thought wrong.

As each month went by without a pregnancy, our emotional stress level increased, seemingly exponentially. I could see the toll it was taking on my wife, and I felt helpless. It was driving us crazy — we both wanted kids badly, and we were each wrestling with the mounting pressure. This went on for two years. Then we were advised to try in vitro fertilization, also known as IVF.

We quickly learned IVF can cost between $12,000 and $15,000 per cycle, which includes medication and shots all the way through the transfer of the embryo. The typical family may have to go through multiple cycles to achieve success. Suddenly, our emergency fund, which we knew was important, became essential to the very future we had envisioned for ourselves — and it didn’t seem adequate.

We began to put away even more cash in our emergency fund to ensure that whatever costs would arise, we were covered. We stopped going out to dinner, made coffee at home instead of going to Starbucks and eliminated vacations. Anything to help increase our emergency fund. This was not easy, but I assure you it was well worth the time and whatever short-term lifestyle sacrifices we were required to make.

Advisor Edward Gay became personally familiar with workplace HSAs and strict budgeting strategies as he and his wife pursued in vitro fertilization to conceive their son, Brody.

We also took advantage of an HSA, which is available in high-deductible health plans through an employer and allows individuals and families to put away $3,500 and as much as $7,000 per year in pre-tax dollars. The funds are available for tax-free withdrawal if you use them for qualified medical expenses (which we did). Using the HSA helped us put money away for the IVF costs and helped reduce our taxable income at the same time.

No one can prepare you for the emotional side of going through the process of trying to have a child through IVF. There are no words to describe the toll this takes, emotionally or physically, particularly for the hopeful mother. Fortunately, we were blessed with our first child, our son Brody, which made the entire process and the financial planning adjustments well worth the trials and tribulations.

According to a 2018 MassMutual study, State of the American Family, just 1 in 4 American families are prepared for a financial emergency. Over the years I have heard numerous advisors say to clients to have “three months of expenses” in an emergency account but in my opinion that’s too low. I recommend that clients have at least six months of expenses in an emergency account. But one year of expenses squirreled away in a safe place is the best-case scenario.

I’m certain there are many of you, like me, learned the hard way how important financial planning, and especially planning for emergencies, really is. Telling clients our personal stories — and letting them know that we eat our own cooking — can inspire others to expect the unexpected and prepare for it.

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