Unemployment spells typically last 2-5 months. But in 2011 the average spell lasted 9 months.

One month’s earnings in reserve can usually cover two months’ of unemployment.  That’s because:

• Most states pay unemployment benefits equal to half your paycheck – up to a monthly maximum and a maximum number of months.
• You’ll lose benefits, like health insurance, but will tighten your belt, cut saving, and put off deferrable expenses.

A rule-of-thumb: As unemployment spells typically last 2 to 5 months, have 2 to 4 month’s pay in reserve.   

2-earner households & households with low fixed expenses need less

• If either is unemployed you’ll typically still have the other paycheck.
• If you spend a lot on discretionary items, save a lot, or can postpone big expenses, you don’t need as large a reserve.

High-earners, single people, and workers who’ll have a hard time finding a job need more

• If you’re a high earner, unemployment benefits replace less of your earnings.  That’s because benefits are capped – generally at half the wage of your state’s “average earner.”
• The longer it would take to find a job the larger reserve you need – benefits are generally limited to six months, or nine months in recessions.

Please fill all required fields

header-small	Your Current Monthly Income
input	Your Take-Home Pay
input	Your Spouse's Take-Home Pay
input results-small	What You Could Cut if Necessary		Unsure? See our 6 minute budget.
total	What You'd Need if Unemployed
header-small	What You'd Need from Your Reserve
text
gap
header-small	What You'd Have if the Higher Earner is Unemployed
input results-small	Unemployment Benefits
input results-small	Lower Earner's Take-Home Pay
input results-small	Other Income
total	Total Income While Unemployed
header-small	The Reserve You'll Need
text
text	We assume unemployment benefits run out after 6 months, which is standard in "normal" times. You can change this and other assumptions in Advanced.
billboard-big
billboard-small	3 Month Unemployment Reserve	6 Month Unemployment Reserve	9 Month Unemployment Reserve
header-marker	Advanced
header-orange	How We Estimate Your Unemployment Benefits
header-small	Enter Your Figures to Change our Estimates.
text	(You can get the rules for your state on the Internet)
header-column		Your Figures	Estimate
input results-small	Yearly Earnings of Higher Earner*
input results-small	% of Earnings Replaced by Unemployment Insurance
input results-small	State Maximum Weekly Benefit
input results-small	Your Weekly Benefit
input results-small	Your Monthly Benefit
input results-small	Your Tax Bracket
input results-small	Your Monthly Benefit After Tax
input results-small	Months of Benefits
text
text-bullets	*Unemployment benefits are based on before tax earnings - we estimate this using your take-home pay. If our estimate is incorrect, you can enter your before tax earnings here.
text-bullets	Click here to find your State's unemployment benefit
text-bullets	Click here to find your marginal tax rate

Your unemployment reserve is a multi-purpose rainy day fund that can help you:

• Pay for an unexpected expense
• Lower insurance premiums by taking on a higher deductible
• Deal with a short term disability

To see how your reserve fits in with other financial goals, try Build A Better Tomorrow.

The information provided on the SquaredAway website is for educational purposes only.  It is not intended to provide personal financial advice.