Emergency Fund for Retirees
Background
An emergency fund is a cash or near-cash buffer set aside for big, unexpected expenses such as hospitalisations, major repairs or family crises. In retirement it replaces the cushioning effect of a salary.
Explanation
Retirees often keep 6–24 months of expenses in savings accounts, FDs or liquid funds, separate from their main portfolio. This lets them handle emergencies without selling long-term investments at bad prices.
Example
A retired couple with monthly expenses of ₹80,000 may hold ₹8–10 lakh across savings and liquid funds. A sudden ₹3 lakh medical bill is covered from this buffer instead of forcing distressed sales of equity funds.
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