Researchers found that unexpected costs are the norm, not the exception. In any given year, 83% of retired households experience at least one unexpected expense. These fall into three broad categories:
- Rainy-day costs, such as major home or vehicle repairs
- Family-related expenses, including helping relatives or covering emergency travel
- Health-related expenses beyond routine care
Health and home costs are especially common, with each affecting well over half of retirees in a typical year.
Age itself made little difference once households reached 65. Instead, income and other socioeconomic factors shaped how often expenses showed up — and how large they became.
How much the surprises cost
When an unexpected expense hits, the price tag can be steep. Among households that experience a shock, average annual costs total about $7,100.
Home and other rainy-day repairs average roughly $3,300. Health-related costs run about $4,100. Family-related events can be even more expensive when they occur, the study found.
For planning purposes, the researchers calculated a “smoothed” estimate — the average annual cost spread across all years of retirement, whether or not a shock occurs in a given year.
That figure comes to about $6,000 a year for the typical retiree household.
A key benchmark — 10% of income
Put another way, unexpected expenses consume about 10% of annual income for the median retiree.
That finding carries a clear message for older homeowners: Emergency savings don’t shrink at retirement — they shift.
Over a 25-year retirement, average surprise costs add up to roughly 2.5 years’ worth of income.
Not all of that needs to sit in a checking account, but some portion must be readily accessible without penalties or forced sales, researchers said.
Who’s most prepared — and who isn’t
Data shows that only 58% of older households have enough cash on hand to cover one average year of unexpected expenses. Another 16% could manage by also dipping into IRAs or 401(k)s.
That leaves more than one-quarter of retirees unable to cover a single year of surprise costs even after exhausting both cash and retirement accounts.
Lower-income households are especially vulnerable. Only about one-third have enough cash to manage a typical year.
Similar gaps appear among Black and Hispanic households, single women and widows — groups that also tend to have less home equity and fewer financial backstops.
For retirees who own their homes, inadequate emergency savings often leads to hard choices — such as taking on high-interest debt, delaying needed repairs, or tapping home equity earlier than planned through loans or reverse mortgages.
The study’s bottom line is blunt: Unexpected expenses are a permanent feature of retirement, not a rare event.
Without sufficient liquid savings, many senior homeowners risk turning routine surprises into long-term financial setbacks.
