I am fortunate to have a pension and Social Security so I don’t depend on accumulated assets as most Americans do or will in retirement and we live below our means.
I have long harped on the idea that even in retirement you need an emergency fund or a good steady income to cover unplanned, outside budgeted expenses AND you need the ability to replenish.
Here is my real life experience in the last two months.
Medical emergency due to accident (wife struck in eye with baseball). $1,700 out of pocket costs, plus travel and hotel expenses for specialty care and surgery, $800 … so far
Car battery dead due to faulty fan module; battery $180, fixing module yet to be determined.
Tornado struck trees on property and have to be removed; cost unknown but based on past experience I’m guessing $2,000
Cleaning roof on house getting ready to be sold, $850
You get the idea. If you can’t pay such bills from your regular income stream and must take them from retirement accumulated funds, your income plan may be in trouble. Equally bad if you charge such expenses, your income stream will be inadequate.