How Large a Cash Reserve Should a GovCon Executive Actually Hold?

Some of the executives I meet have done everything right. They save. They invest. They have six months of expenses in the bank. And one date on a contract still keeps them up at night.

That reaction makes sense. A contract award lands. A bonus lands. A vest lands. Then a recompete puts a date on all of it. A reserve built for a salary does not fit that shape. This guide sizes one for a GovCon executive.

Questions I help executives answer

01 “I have six months of expenses saved. Why does that still feel thin?”

Six months of expenses is sized to a paycheck that does not stop. Your income can stop on a contract date.

1. List your fixed obligations: mortgage, tuition, insurance premiums, loan payments.
2. Add any tax owed on last year’s bonus or vest that you have not paid yet.
3. Multiply by the runway for your tier.

A W-2 executive on a contract with a long runway usually holds six to nine months of fixed obligations. An executive tied to one recompete within 18 months holds nine to twelve. An owner or 1099 consultant holds twelve to eighteen, plus the company’s own operating reserve in a separate account. The exception is a spouse whose income does not follow the government calendar. That income can lower the number.

02 “Should I stop contributing to my TSP or 401(k) during a gap?”

Pausing a contribution is a cost, not a saving. For 2026 the employee limit is $24,500 across the TSP and any 401(k). The catch-up is $8,000 at age 50 and older, and $11,250 at ages 60 through 63 where the plan allows it. Room you do not use does not carry forward.

Cut discretionary spending first. Keep contributions that earn an employer match. Pause the rest only if your cash falls below the floor, which I set at three months of fixed obligations. The harder part is that retirement money feels like a reserve because it is yours. It is not available without tax and a 10 percent additional tax before age 59½, with limited exceptions.

03 “What happens to my health insurance if the contract ends?”

Coverage ends on a date, and the replacement costs more than the payroll deduction you see today.

1. Get the full COBRA premium from your plan administrator. COBRA lasts up to 18 months, and the plan can add up to 2 percent for administration.
2. Price a marketplace plan. Losing coverage opens a 60-day special enrollment period.
3. Add the higher monthly figure to your fixed obligations.

04 “Does my stock count toward the reserve?”

No. Unvested RSUs, unexercised options and shares of your employer sit on the same risk as your paycheck. They can be forfeited on separation. Home equity does not count either, because a lender looks at income before it lends. The exception is stock you already sold at vest. Once it is cash, it counts.

05 “Where should the cash sit?”

A reserve has two jobs. It has to be there, and you have to be able to reach it.

1. Put the first three months in a high-yield savings account or money market fund you can reach the same day.
2. Put the next months in Treasury bills with 4-, 8- and 13-week maturities, so one rolls off each month.
3. Keep the reserve in an account separate from daily spending.
4. Stay within FDIC limits at each bank ($250,000 per depositor, per ownership category) and SIPC limits at each brokerage.

When to re-size it

Re-size when a recompete is announced, when a contract moves into an option year, when you change roles and when a vest changes your tax bill.

None of this has to be solved alone. If you want the number sized to your own contract timeline, book a free 20-minute call with me.

Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. The financial professionals associated with RPM Financial Group may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.