Preparing for unexpected retirement expenses: Emergency funds, savings & insurance

As people enter their retirement years, unexpected expenses can become more challenging to handle. Home repairs, medical bills, and other expenses can quickly eat into a fixed retirement budget. Without an emergency fund, retirees may have to dip into their retirement savings, causing them to lose out on potential investment earnings and potentially depleting their savings faster than expected. Listed below are a few suggestions on financial habits you can begin implementing now to prepare for your retirement.

1. Establish a retirement savings goal

Planning and setting a goal to achieve can help you avoid overspending while keeping you financially secure in case of an emergency. Relating back to early preparation, for the best outcome, establishing a savings goal should be planned out years before retiring. Saving for retirement is important because unexpected expenses can arise, and having a savings cushion is helpful. Moreover, as the cost of living rises and inflation takes a toll on purchasing power, having savings can help you maintain your standard of living and avoid dipping into your retirement savings or taking on debts.

2. Open an emergency account

If you don't have emergency retirement funds, you may find yourself constantly worrying about your financial situation, or second-guessing whether you'll have enough money to cover your expenses with the rising cost of living. The pressure can cause stress and anxiety, which can negatively impact your health and well-being. Ideally, an emergency account should have enough funds to cover at least three to six months' worth of living expenses. This will provide you with a safety net and ensure that you can weather any unexpected financial storms. By opening an emergency account and regularly contributing to it, you can prepare yourself financially for any surprises that life may throw your way.

3. Cut down on unnecessary expenses

The dangers of boredom can sometimes lead to buying unnecessary things, especially with the convenience of online shopping. Impulse buying can be a very real treat. Listed below are some tips to avoid impulse buying:

• Identify if the item is a ‘want’ or a ‘need’.
  
• If it's a ‘want’, reconsider buying the item.
  
• If not purchasing this item gets stuck at the back of your mind, try giving it a few days to think about this possible purchase before committing to buying the item.
  
• If you are still dead set on getting this item, look at the more affordable alternatives available.

4. Automate funds from your checking to your emergency account

Consider automating the transfer of funds from your checking account to your emergency account. By setting up automatic transfers, you can ensure that a portion of your income is directed towards your emergency account on a regular basis without having to actively think about it. This strategy can also help you stay disciplined and avoid the temptation to spend the funds meant for savings. If you don't see the funds in your checking account, you're less likely to spend them on impulse purchases or other discretionary expenses.

Don't let unexpected expenses derail your retirement plans. Protect your financial future to ensure peace of mind with Great Eastern's Life Insurance, with our comprehensive coverage, you can enjoy retirement without worrying about unforeseen expenses.