You Have No Emergency Savings
Emergencies don’t end when retirement begins. A single home or auto repair – say, you need to replace your roof or get a new transmission – can strike a devastating blow to the budgets of fixed-income retirees who don’t have money set aside for just such calamities.
Unfortunately, quite a few baby boomers are members of the no-emergency-savings club. According to a Bankrate survey, 25% of boomers have no cash whatsoever put away to cover an emergency. Another 18% of boomers say their emergency savings would cover less than three months’ worth of living expenses.
Review your budget and reduce spending temporarily, so you can slowly build up your emergency fund. Six months’ worth of living expenses is generally recommended – just 36% of the boomers surveyed had hit that benchmark – but three-plus months should be adequate for many retirees. And keep insurance up to date to avoid taking a big hit from an auto accident, house fire or sudden illness.