I have long advocated an emergency fund in retirement. Many people can’t understand why someone not working and living on a more or less fixed income should establish and be able to replenish an emergency fund.
Financial emergencies happen in retirement too. And, if you do not have resources in addition to retirement income savings, a cash emergency could screw up your finances permanently…and cause you to go into debt.
So, when you set up your retirement budget, include ongoing savings.
Excerpt from USA Today.
Have an emergency fund. Typically, the first line of defense, says Whitcomb, is your emergency fund. How much should you have in that account? According to JPMorgan Chase, families ages 65-plus with income less than $29,000 need a little bit more than $2,300 set aside while those with income greater than $95,000 need a little bit more than $13,000. A middle-income family meanwhile would need about $5,000 to cover “concurrent adverse income and spending shocks.”
For her part, Sharon Carson, a retirement strategist with J.P. Morgan Asset Management, says having a cash buffer for out-of-pocket heath care expenses and long-term care expenses is also necessary. For instance, expected health care costs are projected to rise from $5,300 for a 65-year Medicare beneficiary in 2020 to $16,810 for a 95-year-old beneficiary.
The article then goes on to suggest ways to tap various assets, mostly by way of borrowing…why?
An emergency fund is not what you can borrow.