What an Average Middle-Class Emergency Fund Looks Like at Age 65 vs. 75
An emergency fund is a cash reserve to cover unexpected expenses you don’t see coming: a hospital bill, a dead car battery, a fender bender, a broken appliance or a mortgage payment after a loss of income or a slow month when you have your own business. Having an emergency fund can help you avoid racking up interest fees on a credit card you may not be able to pay in full when the invoice comes.
So how much money should you have in an emergency fund?
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Fifty-five percent of adults said they had set aside three months of expenses in an emergency savings fund for a “rainy day,” according to a Federal Reserve 2024 Survey of Household Economics and Decisionmaking.
However, emergency funds can look much different for retirees, especially those who are fully retired or working part time. Here’s what an average middle-class emergency fund may look like at age 65 versus 75.
While there is limited public data on middle-class retiree emergency funds, averages can help provide a useful estimate of cash reserves for retirees. Other useful data points when considering emergency funds besides age are whether individuals and couples either have or don’t have children.
Retirees with adult children may need a larger emergency fund to help their loved ones with expenses. Money can come in the form of gifts or loans. Some expenses include rent, mortgage payments, a down payment on a home, divorce costs, student loan premiums and funding weddings and other expenses, especially when children have experienced a layoff or a decline in income.
Other factors to consider when determining how many months to keep in an emergency fund include other assets, such as real estate that earns rental income.
Average Middle-Class Emergency Fund at Age 65
Today, retirement can look different for people at age 65 than it did 20 years ago. Many seniors born after 1960 are delaying retirement to the full retirement age of 67. By contributing more to their Social Security, they can receive a higher monthly benefit payment.
Other retirees hold part-time jobs, splitting contributions with employers, while others are self-employed and pay full Social Security taxes. People in this age group may begin incurring healthcare costs and traveling regularly.
Here’s a breakdown of the average emergency fund for ages 65 to 74, according to Financial Samurai:
Singles with children: $6,652
Singles with no children: $7,292
Couples with children: $13,164
Couples with no children: $15,297
E.J. Simonsen, founder and financial advisor at EIDLexit, said emergency fund needs in retirement are less about age alone and more about the risks a retiree carries.
“Around 65, many people are just moving away from a paycheck and may still be covering travel, home maintenance and home-related costs. In that stage, a cash reserve of six to 12 months of living expenses can help retirees avoid selling investments during a market crash,” Simonsen said.
Average Middle-Class Emergency Fund at Age 75
By age 75, emergency savings can look different from what they did at age 65. Instead of supplementing a paycheck or covering a decline in work, the money can help cover healthcare, caregiving and maintenance costs when investment income is down.
According to Financial Samurai, the average emergency fund for people ages 75 and older breaks down like this:
Singles with children: $6,909
Singles with no children: $9,981
Couples with children: $8,967
Couples with no children: $16,025
Singles and couples without children have higher average emergency funds at 75 and older than at 65 to 74. By 75, many retirees may have paid off their mortgages, downsized their homes or reduced commuting and workplace attire expenses. This enables this age group to save more cash.
However, age 75 comes with additional financial risks that impact emergency savings, Simonsen said.
“Unexpected medical treatments, prescription costs, in-home care, mobility adjustments and temporary caregiving services can all create expenses that are difficult to absorb from a fixed monthly income.”
Split Your Emergency Fund in Two To Boost Protection
One practical strategy Simonsen recommended is to create “two emergency savings buckets: one for general emergencies and a smaller one for medical or care-related costs.”
“That can help retirees keep money available for health needs without disrupting [a retiree’s] regular budget or investment plan,” Simonsen said.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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