Throughout your life, you’ve probably heard that an emergency fund is a must – or, at least, a very good idea. If you lost your job, those savings would hopefully be able to cover your expenses until you found a new job. But what about after those working years – do you still need an emergency fund in retirement?
Emergencies in Retirement May Be Different
When your working life comes to a close, you may no longer be concerned about losing a job or needing emergency cash to cover you in that instance. Instead, retirement may come with another set of emergencies. While different than they were before, these emergencies can sometimes require you to have additional funds on hand.
For example, if you’re dealing with a medical issue or your home needs major repairs, you may need to pay for anything insurance doesn’t cover. Remember, you’re no longer receiving income from an employer, so now you have to fund emergencies with other sources of income.
Your Emergency Funds May Be Different, Too
It’s still a good idea to have access to liquid cash when you need it, so you may want to keep that savings account active. Outside your traditional emergency stash, however, you may have other types of funds you can tap.
Home equity lines of credit, for example, can leverage the equity in your home and may give you access to additional cash. Reverse mortgages may also be an option, but may come with additional rules and regulations to consider first.
You may also lean more on your insurance as an emergency fund in retirement. Medicare may cover some of your health expenses, as may supplemental and long-term care insurance. Home repairs and maintenance may be covered under your homeowner’s insurance plan. While they may not cover everything that comes up during retirement, insurance can be much better than paying for it all out-of-pocket.
To discover what types of emergency funds you may need for retirement, be sure to talk with a financial advisor who specializes in retirement planning.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.