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Some financial mistakes are easy to fix, like discovering that you’ve been spending money on a streaming service that you no longer use — usually all it takes is a few clicks of a button to cancel a subscription. Being unprepared for a costly emergency, on the other hand, can wreak havoc on your finances, especially if you’re nearing retirement or are retired and living on a fixed income.
From a busted car engine to an unexpected medical bill, many emergencies are outside your control. What you can control is setting up a dedicated emergency fund to cover surprise out-of-pocket expenses before they arise.
Yet many older adults aren’t prepared for a rainy day. Around 1 in 4 Gen Xers (ages 45-60) and 16 percent of boomers (ages 61-79) have no emergency savings, according to Bankrate’s 2025 annual emergency savings report. “Emergency funds are arguably even more important for retirees, as they no longer are receiving a paycheck,” says Alex Doll, a certified financial planner and president of Anfield Wealth Management in Cleveland. “It’s also important for unexpected costs that often arise later in life, especially health care costs, which are hard to predict.”
Being unprepared — or underprepared with only a small amount of funds set aside for emergencies — could force some people to rack up thousands or tens of thousands of dollars in credit card debt or make early withdrawals from their retirement accounts despite the high tax penalties and fees.
Don’t want to end up in those kinds of dire straits? Make sure to avoid these six common emergency fund pitfalls that people 50 and older make.
1. Saving too little
One rule of thumb is to build an emergency fund that can cover three to six months’ worth of living expenses. However, retirees should save more, stashing away enough cash to cover 18 to 24 months of essential expenses, says Kristen Beckstead, a certified financial planner and vice president at First Horizon Advisors in Nashville, Tennessee. “It might sound like a lot, but in retirement, you don’t have the cushion of a paycheck to fall back on,” she says.
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