Savings vs. Investments - which do I use?

I have about two months income replacement saved up in my EF/IR fund. I have a similar amount saved up in my medical expenses, which is way more than I need, particularly now that my husband is on hospice. I also have off-budget money, much of which is invested (non-retirement accounts), but a large chunk of which is sitting as "cash" since I'm going to lose income for I don't know how long in the near future.

So the question is: Do I spend down my savings first, or do I dip into the off-budget money? I *think* the better thing is to use up the money in my bank accounts first, but that feels really scary. Dipping into the off-budget money feels less scary, but probably has a much more negative long-term effect on my financial stability/security.

I also asked this in my journal, but was advised to ping @nolesrule who gives good advice, and figured this might be a useful thing for others who don't look at journals.

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  • I don't think that tag would have sent a notification. nolesrule

  • First - I am sorry for the difficult time that you are going through right now. I guess all I can do is send wishes that your husband is as comfortable as possible.

    Clarifying questions - you are asking is it better to use money in a traditional savings account or to cash out investments from taxable investing accounts. When will you be spending this money? Is it during a period when you will have no/low income? You mention that you don't know for certain the time period that you are talking about. Is this because you are planning on going back to work at some time or will you be reaching a point where you will be receiving a pension or begin to draw from things like IRAs/401(k)s? Will you be inheriting any IRAs/401(k)s/etc from your husband?

    I don't have any answers, but these are some of the factors that will go into the process of determining which is a more ideal solution.

    • jenmas said:
      you are asking is it better to use money in a traditional savings account or to cash out investments from taxable investing accounts.

       Yes, this.

      I don't know when I will start spending this money - I'm currently still working, and while I'm cutting back to part time next month, I have paid family medical leave that will cover at least some of the loss of income for some period of time.  I'm not sure how much it will cover, or if I'll need to be on leave for longer than it will last.

      I also don't know how long I'll have to use those funds either - could be anywhere from only a couple months to a year. (The chances that it will be more than a year are extremely slim, so I'm not really planning that.) I do expect to go back to work when I no longer need to take care of my husband - hopefully at the same job, at least for a while.

      So the savings/investment money will be for a period of low/no income, while I'm taking care of my husband.

      I'm sufficiently far from retirement age that IRA/401k/etc. don't factor into this. I have enough in the taxable investing accounts to not need to touch the money we have set aside there, and my limited understanding is it's better to take from the taxable investing than to have the early withdrawal penalties for the retirement accounts.


      And thank you for your wishes.

      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      Fuzzball Meows I was asking if you were inheriting any IRAs because there are implications with that (though as a spouse, as opposed to other heir, I believe it's not as big of an issue).

    • jenmas Ah - I think he has a 401k. I kinda figure I'll deal with the inheritance issues when they come up... Someone (lawyer, tax person, financial advisor person?) should be able to tell me if there are any issues/implications. Given his work history (or really, lack thereof, due to age), I don't think it's a significant amount, so implications should be minimal, I would think.

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