How to start an emergency fund
It's easier than you might think to start an emergency fund to help protect your retirement savings, even if you're starting from zero.
First, figure out how much you need in your emergency fund. While experts tend to agree that emergency savings should equal three to six months of living expenses, you might not feel you need so much saved in retirement since you're not at risk for losing a job. However, you'll want to have enough on hand to weather an expense that would otherwise put a crimp in your retirement savings.
Once you determine how much you need to save, you can use an automatic savings plan to launch your emergency fund. You can coordinate automatic transfers to a savings or money market account the day after receiving your regular Social Security or retirement distributions each month. You can start small with the automatic transfers and gradually increase them if you find you can afford to save more. Keep those automatic transfers going until you hit your savings goal.
If you feel you don't have enough left over each month, you can try these tips for making adjustments in your budget to carve out room for savings. Common tips for finding some extra cash to stash in savings include cutting back on takeout and canceling unused subscriptions and memberships until you have a comfortable-to-you amount in savings.
Maintaining your retirement emergency fund
Once you've hit your emergency fund savings goals, maintaining your funds is critical. As expenses come along that put a dent in your fund, go back to setting up automatic transfers to replenish your savings.
Besides keeping your savings replenished, it's wise to do a periodic check-up on whether you feel your emergency fund has too much or too little in it for comfort. A good rule of thumb is to check in on your emergency fund after every emergency. You can adjust your savings upward or downward depending on your living expenses and life changes.
No matter where you're at with your savings goals heading into or during retirement, it's never too late to start an emergency fund to protect your retirement savings. By doing so, you'll protect your income stream while creating a way for you to easily deal with anything life throws your way.