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Comment by pmiller2 | Hacker News Reader

I’m wondering how these two statements comport:

> Just over half (53%) of Gen Xers report having three months worth of salary socked away — money that could be used as an emergency fund. What’s more, 48% of Gen Xers said they’re living paycheck to paycheck

Since 48 + 53 > 100, either there is a rounding error or there are people who have 3 months’ savings who are also living paycheck to paycheck. I don’t see how it’s possible to be living paycheck to paycheck and have significant savings, unless this implies a sudden and relatively recent change in circumstances. It would be interesting to see if there is more detail on this in the linked MetLife study (which I haven’t got time to read right now, unfortunately).

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Is the 3 months of salary socked away somewhere it is accessible? I have hundreds of thousands of dollars in 401k, but I live paycheck to paycheck and have no readily accessible savings.

Why did you do that? You should be funding an emergency savings account before funding your 401k.

Why? To avoid the situation you’re in - no easy access to savings.

Employer-matched contributions to a 401k should be prioritized before an emergency fund. Otherwise you are leaving free money on the table. This applies to many Americans.

Disagree. What happens if you have an emergency? Then you end up withdrawing from the 401k + penalty.

How often do you have emergencies? Seems to me that if your life is going sideways, paying the penalty to get money out of your 401k would be worthwhile; but I expect that my life generally won't go sideways, so the extra percentage of income is more likely to be a benefit than the potential penalty is to be a detriment.

Even with the penalty and tax, it will be less than 50 percent, making it financially beneficial since the employer is matching 100 percent.

Sure, if it's 100% employer match. Even employers that do matching often do it below 100%.

> What happens if you have an emergency?

You borrow from the 401K. If for some reason that's not an option, you take money out with a penalty, but with sufficient match you are still often ahead.

Because my employer does 5% matching. So I put in my 5% and they put in their 5%. I know I should have an emergency fund, I just don't have the means to fund it.

I see. That’s risky.

If you have steady employment, might I suggest opening a line of credit with your bank? If you have good credit the rate is reasonable. It costs you nothing unless you use it. And if you have to liquidate your 401k, you can pay it back in days.

If your regular pay just barely makes ends meet, but you've had a couple of windfalls and exercised financial discipline with the results. You aren't able to save, but you aren't broke.

For me until I got a slight pay bump recently. I have devoted all my savings to an oh shit fund. I was also living pay check to pay check.

My definition of pay check is two fold.

1) Having to withdraw from the emergency fund to cover bills/groceries. 2) Hitting 0 in the daily spending bucket, and counting down the days until the next pay date.

So there can be some people. With good intent of saving, and putting away what they can. But also being fiscally tight.

Could be they've earmarked the savings earlier. Or had a windfall, or they include putting aside 1% of their income to savings as still living paycheck to paycheck.

It can definitely be the case that someone's income is being entirely spent each paycheck and that they have some savings.

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