Yes, you still need an emergency fund in retirement. Here’s how much you should have.

Financial planners often recommend building an emergency fund first before starting to save and invest for retirement, a down payment on a home, or a child’s college fund.

This advice makes sense for working-age households, who may face income shocks such as job loss, disability, or pay cuts, as well as expense shocks such as unexpected major home repairs.

Emergency savings are designed to provide a buffer to help households withstand these shocks and avoid reliance on high-cost borrowing such as credit cards.

The rule of thumb is well known: Families are typically told to set aside three to six months of essential expenses to cover worst-case scenarios and other unexpected circumstances.

For those who are still working, the guidance is simple.

But what about those who are retiring or already retired? Do they still need an emergency fund? If so, how much should they have – three to six months of expenses, 10% of income, enough to cover a year or more of expenses, or some other amount?

A new study from Boston College’s Center for Retirement Research addresses this question and examines how retirees can prepare for unexpected expenses.

In their study, titled “What Are Retirees’ Emergency Expenses? Are They Prepared?” — researchers Manita Rao and Anqi Chen come to a sobering conclusion: Many retirees are unprepared for unexpected expenses.

Rao and Chen found that under normal circumstances, the typical retired household spends about 10% of its income on unexpected expenses. Yet 40% of retirees don’t have enough cash to cover even one year of such expenses. One in five people still can’t pay after accounting for retirement savings, and 27% can’t cover a year’s worth of unexpected expenses even after depleting their cash and retirement accounts.

“Unexpected expenses don’t go away once people retire,” the authors wrote, calling them a real and ongoing risk for retired households.

These costs can be a significant source of financial stress, especially for vulnerable populations, including low-income families, black and Hispanic families, single women, and widowed retirees.

So what guidance do experts give?

Sharon Carson, a retirement strategist at J.P. Morgan Asset Management, said the researchers’ findings align closely with her firm’s own research, which highlights the variability of retirement spending and the continued need for emergency savings after someone stops working.

In its 2025 Retirement Guide, J.P. Morgan Asset Management looked at how much net income workers ages 25 to 64 and retirees 65 and older would need to withstand spending and income shocks.

Workers typically experience spending shocks more frequently (about once every three months), while income shocks tend to occur about once a year. As a result, workers are typically advised to set aside two to three months’ worth of wages in an emergency fund, the company noted.

In contrast, retirees tend to face larger spending shocks than workers, often driven by unpredictable costs like health care. For this reason, JPMorgan says retirees should consider setting aside three to six months of income as emergency savings.

The chart below shows recommended annual emergency reserves expressed as the number of weeks of net income required to withstand spending and income shocks:

Carson said there are two main reasons retirees need to set aside more income. First, they may face greater medical bills and larger home repairs, especially those who live in older homes. Second, income tends to decline in retirement, so when savings are measured relative to net income, more weeks of income are needed.

The Center for Retirement Research also found that the nature of financial shocks changes after retirement.

Job loss is the biggest financial shock that working families face. In retirement, health-related, housing-related and family-related expenses play a larger role.

Rao and Chen found that as many as 60% of households experienced “rainy day” shocks, such as car repairs, home maintenance, or other durable goods purchases. About 29% face unexpected family-related expenses, including transfers to parents or children, the death of a spouse, or divorce. 58% of people experience unexpected medical expenses, ranging from dental care and prescription drugs to home improvements, nursing home care or in-home care.

Research shows that in U.S. dollars, all households can expect to have an average of about $6,000 in unexpected expenses each year, with health care being the largest expense category for retired households.

For planning purposes, retirees should consider having emergency savings equal to about 10 percent of annual income, Rao and Chen write. Over a 25-year retirement period, this means unexpected expenses total the equivalent of 2.5 years of income, although these costs are spread over time and the entire amount does not need to be kept in a liquid account.

Research by Sudipto Banerjee, retired thought leadership director at T. Rowe Price, shows large swings from year to year. He found that about a quarter of retirees saw their annual spending rise by about 17% to 20% over two years, while a similar proportion experienced comparable declines over the same period.

Housing plays a huge role in this volatility. While health care and home-related costs tend to provide discrete spending shocks, housing and home-related expenses are the largest contributors to year-to-year fluctuations in retirement spending.

With that in mind, Banerjee said retirees should consider the possibility of taking steps to reduce unexpected housing expenses, such as completing major renovations before retirement or downsizing to a new home, a move that could reduce the need for emergency cash later.

JPMorgan research shows that when households lack dedicated emergency savings, they often tap into their retirement portfolios to cover unexpected expenses.

This approach can be costly. The company’s Retirement Guide states, “Withdrawing funds from retirement savings accounts too early can have dire consequences for achieving a successful retirement outcome.”

Increased spending isn’t always temporary. Banerjee found that about 15% of households whose spending increased by 25% or more were still at elevated levels four years later, creating liquidity challenges that could force retirees to withdraw long-term investments earlier than planned.

Strategies that can help older adults manage unexpected expenses include delaying taking Social Security, improving advice on withdrawing money from retirement accounts and making greater use of health savings accounts, Rao and Chen said.

When it comes to estimating how much a retiree should have in emergency savings, the guidelines may seem inconsistent at first.

JPMorgan advises retirees to hold three to six months of income in emergency savings. Rao and Chen recommend setting aside 10% of your annual income. Some experts, including Judy Ward, who recently retired from T. Rowe Price, recommend that retirees consider holding one to two years of payouts in cash or cash equivalents to prevent long-term dislocations and avoid being forced to withdraw money from long-term portfolios during times of stress.

Overall, however, the guidance points to a common theme: Retirees need sufficient liquid savings to withstand the next shock, as well as a broader plan to treat unexpected expenses as a regular part of retirement, rather than a one-time event.

How much is enough for each household depends on how often retirees face expense shocks, the size of those shocks and how prepared they are today.

No matter how much you set aside, timing is important. Because families can face unexpected expenses nearly every year of retirement, retirees should build emergency savings early.

“Because retirees have limited ability to replenish their savings through additional working years, having as many of these resources as possible at the beginning of retirement is important for their financial security,” Rao and Chen suggest.