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AUTHOR: R Quinn on 1/24/2026
Root canal, kaput refrigerator, major car repairs, expensive prescription, 🤑shopping cart dents your car😎
What do the above have in common? They can legitimately be called a financial emergency, and they can happen to retirees as well as anyone else.
New research from the Center for Retirement Research (How Much Are Emergency Expenses for Retirees and Are They Prepared?) shows that the typical retired household spends 10 percent of income on unexpected expenses in a normal year.
Further, “two in five households lack the cash to cover such expenses for just one year. And one in five falls short even after including retirement savings.”
“Retirees, tend to face larger spending shocks than workers, often driven by unpredictable costs such as healthcare. For that reason, retirees should consider holding three to six months’ worth of income in emergency savings,” according research by to J.P. Morgan.
I disagree that for those of us on Medicare, healthcare costs are a likely financial emergency. We can generally insure most of that. Long-term care is an exception, but that is generally a cost over time. Even high prescription costs are now limited to $2100 a year and thus can be planned for – with some funds set aside.
When our refrigerator froze its last leftover, it cost several thousand dollars to replace and we had to replace it quickly. I charged the cost to get 1.5% cash back and immediately paid the card balance from our ash reserves.
An emergency fund is not cash in the retirement account, it is outside retirement funds. We keep cash in our brokerage account, but also in our local bank account. But I admit, that cash is no where near 3-6 months of income. I think that amount should vary by the retirees income because many financial emergencies (such as a fridge) are not income related, with lower income retirees needing a larger reserve. What are your thoughts?
We add to the cash fund each month and as it has turned out the last year, that was necessary just to replenish it. I think replenishing such funds as needed should come from your ongoing income stream regardless of how you create income.
QUINNSCOMMENTARY 
Dad had an ’emergency fund’. He had no savings or investments and was in consumer debt when he retired. He and my step mom lived on SS only. But he had nine children. Seven still living, and four who lived close by.
He never lacked necessities and some luxuries, but… He confided that he hated old age: “I was always one people came to for help, and happy to. I don’t like being dependent on others.”
They were buying a small house and like many on SS, when one check stops, the house is no longer affordable. Fortunately for stepmom, she was happy to go join her friends in “the highrise” (three story senior facility)
Fortunately, the wife and I were much luckier*. We have enough pensions to live comfortably, and add to our investments instead of drawing them down. Leave more for the kids, if the creek don’t rise.
*Yes, we both worked hard for years, but retired in consumer debt. But we downsized at top of the market and were able to invest considerable equity. Luck.
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