Here’s How Much Retirees Should Keep in an Emergency Fund

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For retirees, this advice is especially important.

You want to enjoyyour retirement, not spend it worried about running out of funds or going into debt.

Salahi recommended retirees aim to keep 12 to 18 months of living expenses in their emergency fund.

This larger buffer is crucial for several reasons.

First, retirees dont have the option of increasing their income throughovertime or side gigslike working individuals do.

Second, unexpected healthcare costs tend to rise as we age, potentially leading to larger emergency expenses.

All of that said, here is a breakdown of factors retirees should consider whendetermining their emergency fund size.

According to Salahi, medical emergencies can be more frequent and costly for retirees.

This could cover unexpected out-of-pocket costs or gaps in Medicare coverage.

Retirees relying on investment income need to protect against market downturns, Salahi explained.

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A larger emergency fund allows them to avoid selling investments at a loss during market dips.

I advise retirees to keep 18 to 24 months of essential living expenses in an emergency fund.

In retirement, health issues arise unexpectedly and markets fluctuate, impactingincome and savings, he explained.

Older homes and vehicles often require more maintenance, Salahi noted.

Salahi explained that with potentially decades in retirement, inflation can significantly impact purchasing power.

For example, unexpected illness when traveling can easily add up in costs.

Regularly reassessing the emergency fund is equally vital.

This ensures the fund remains adequate throughout retirement.