Laura Scharr-Bykowsky, CFP, MBA; Ascend Financial Planning LLC; Columbia, S.C.

Normally I recommend that my clients have six to nine months emergency reserves. But as my clients approach retirement I like them to build three to five years net cash flow reserves.

These reserves should cover their “gap” of income minus living expenses in the first few years of retirement. This should also include money allotted for large purchases such as vehicles or trips.

Matt Buckwalter, CFP; MJB Financial Planning; Lincoln, Neb.

Here are my top five ways to cover unexpected expenses, starting with least preferred:

#5 – Home Equity. Although not preferred, it may be time to downsize. Downsizing can reduce expenses in the long-term and may resupply a cash reserve. Downsizing might mean renting. This may be preferred to a 10 percent penalty on a 401(k) withdrawal.

#4 – Tap life insurance cash value. Either cash it in (if not needed) or take a loan.

#3 – IRA (traditional or Roth). Withdrawals from IRAs to cover medical expenses that exceed 7.5 percent of adjusted gross income can be made penalty-free. If unemployed, the 7.5% limit doesn’t apply when used to pay insurance premiums.

#2 – Taxable investments. This one assumes the investments aren’t cash but available. Sometimes you need to bite the bullet if you weren’t prepared for the unexpected. It may be painful as we know when markets are down but alternatives may not exist.

#1 – Roth IRA contributions. This is most preferred and if structured right can provide a good way to have short-term reserves available for emergencies and keep the income from showing up on a tax return.

Constance (Connie) A. Stone, CFP, ATP; Stepping Stone Financial Inc.; Chagrin Falls, Ohio

I advise clients who are nearing retirement to have at least two years of gross income in cash reserves so they don’t have to worry about market volatility or unexpected expenses.

I also advise clients who intend to work for several years to have at least 30 percent of their gross wages in a cash reserve for the same reason, and then build it up as retirement approaches.

Finally, it’s better to take a home-equity loan or a part-time temporary job than it is to borrow from a 401(k) or take a hardship withdrawal.

Jerry Verseput, CFP; Veripax Financial Management LLC; El Dorado Hills, Calif.

I plan for this early by encouraging clients to begin some form of Roth account, either a Roth IRA or Roth 401(k), well before retirement. The purpose is not expressly to avoid higher tax rates (it may or may not), but more importantly to provide a “bucket” of tax-free money that can be used for unexpected or unusually high expenses that could result in a higher tax bracket in retirement.

This is essentially a retirement emergency fund that is held in a Roth account. Although the number is completely made up, I like to see at least 10-20 percent of overall retirement savings sheltered in an account that won’t generate taxes at withdrawal.

Joel B. Javer, CLU, CFP; Sharkey, Howes & Javer Inc.; Denver

As people approach retirement, we have recommended increasing emergency reserves and also have put about two-years worth of their income needs in cash, money markets or a laddered bond structure in their portfolio.

My guess is that those who are tapping 401(k) plans are tapping the only savings/investments that they have.

Depending upon client situations, we have traditionally recommended having a home equity line of credit available for emergencies. Granted, this could put their home at risk if they do not have any means to pay it back, which is likely for those that are tapping into their 401(k) plans.