How Much Emergency Savings Do Retirees Need



Many financial experts emphasize the importance of emergency fund in our lives. Having one can help us fund unforeseen expenses, such as losing a job, medical bills, or having temporary disability.

Whether you are a newly graduate or heading to your retirement years, emergency fund is essential in every stage of life.

Do you have idea how much emergency fund do retirees need? Read on and let’s take a look.

The importance of emergency fund in retirement
Just like the retirement fund, having an emergency fund during retirement is essential. Building one can help you fund emergency events like major home repairs. Also, having one will help you not to drain your social security benefits. Lastly, emergency fund can help in one of the biggest expenses in retirement: health care. Apart from having a health insurance, it is also practical to have an emergency fund to support the expenses in medical bills. Hence, emergency fund is really important in retirement years.

How much emergency savings should you have?
To be able to answer this question, you have to know two things: how much you spend monthly and how much you want to set aside for any emergency expenses.

Identify your monthly expenses first to be able to know how much your retirement budget will be. Here are some of the expenses to take note:
·         Home costing
·         Utilities
·         Food
·         Insurance premium
·         Savings and investments
·         Health care expenses and maintenance
·         Travel expenses

Also, determine the retirement lifestyle that you want. Do you want to travel often? Are you going to retire in the city or in the province? Answering these questions will help you determine how much you will be needing in your retirement.

Furthermore, you can use a retirement calculator to project your monthly expenses and retirement budget.

Your goal here is to determine the amount you needed to cover up your living expenses.

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Where to keep your savings?
Since the goal of an emergency fund is to be accessible during unforeseen events, you should be able to keep it where you can access it easily. Here are the common places where you can keep your emergency savings:
·         Savings account
·         Checking account
·         Mutual funds

If you opt for savings or checking account, pick a high-yield account. This way, you can have a chance to grow your money since this type of account offers a better interest rate per year compared to a traditional savings account.

On the other hand, if you want a higher rate compared to a savings account, opt for a mutual fund. This will enable your money to grow over the years without the risk of loss unlike with the stocks.

Key takeaway
Financial security is important for everyone. Having one can help us look into the future without the worry of dealing with unexpected expenses or losses.

Building an emergency fund is one way to have a secured future.

How Much Emergency Savings Do Retirees Need How Much Emergency Savings Do Retirees Need Reviewed by Sahil Arora on October 30, 2019 Rating: 5

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