To ensure a secure retirement, focus on more than just your nest egg. A cash reserve for emergencies is crucial. Nearly 83% of retired households face unexpected expenses each year, costing about 10% of annual income. Three main categories these costs fall into are household needs, family-related expenses, and healthcare. Many retirees lack enough cash to cover these shocks, emphasizing the need for a dedicated emergency fund.

In retirement, unexpected expenses can be more challenging to handle without a steady income. Tapping retirement accounts for emergencies can lead to tax penalties and other financial consequences. Finding the right balance for your emergency fund is essential. It should prioritize liquidity and yield, with options like high-yield savings accounts or money market accounts.

Creating a multi-bucket structure for your emergency fund can help safeguard your retirement savings. Automating your savings and utilizing tools like Pension-Linked Emergency Savings Accounts (PLESAs) can further protect your finances. By combining these strategies with preventive measures, you can ensure that unexpected expenses are minor inconveniences rather than financial disasters.

Read more at Yahoo Finance: Retirees can face unexpected expenses of up to $7,000 a year. Here’s how to prepare your safety net now