How much money do you need to save at age 60?

At age 60, financial issues start to become a little more pressing – especially when it comes to your savings. Maybe you’re ending your career or retiring entirely, and suddenly the focus shifts to how much you have saved for emergencies. But how much should you have in your savings account right now?

Let’s get one thing straight: This isn’t about your retirement accounts. Your 401(k), IRA, or other tax-advantaged retirement account should contain money that is separate from your regular savings. Your savings account is intended for everyday emergencies or large expenses that arise before you start investing for retirement.

General savings tips

At the age of 60, the rule of thumb is that you need to have enough savings to cover six to twelve months of living expenses. Why the larger amount than the conventional wisdom of three to six months? You’re nearing retirement (or have already reached it), and while it’s great to have consistent income through pensions, withdrawals from your retirement account, or Social Security, having a larger cash cushion ensures you’re prepared for the unexpected.

To figure out how much this means to you, calculate your monthly living expenses – housing, utilities, groceries, insurance, transportation and any ongoing debt payments. Multiply that by six or, if you want more certainty, by 12.

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For example, if your monthly expenses are $5,000, you should aim for between $30,000 and $60,000 in your savings account. This is your cushion for unexpected expenses like home repairs, medical bills or last-minute trips.

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Factors to consider

While it’s helpful to set a six- to 12-month living expense rule, it’s important to think about your specific situation at age 60 and how that might change your savings needs.

Health needs

As we get older, health care becomes more and more important. If you don’t have comprehensive insurance or a Medicare supplement plan, consider padding your savings for unexpected medical expenses. Health emergencies can be expensive even with insurance, so it’s an area where additional savings are essential.

Changes in income

If you’re retired, your income likely comes from fixed sources such as Social Security, pensions, or retirement account withdrawals. While these sources are stable, they are also limited. Without the flexibility of a regular paycheck, larger savings can serve as a buffer against unexpected costs.

Housing costs

Regardless of whether you are still paying off a mortgage, live in a rental apartment, or own your home vacant and unoccupied, housing costs can shift as you get older. Maybe you’re thinking about downsizing or moving closer to family. Any major home change may require significant savings for repairs, renovations or a deposit.

Relatives or carers

If you are helping adult children or providing financial support to aging parents, you may need to accumulate more savings to meet these obligations. Nursing care or financial assistance can quickly drain your savings if you don’t plan for it.

Beyond emergency funds

At 60, it’s wise to consider expanding savings beyond an emergency fund. You are entering a new phase of life and the unpredictability of healthcare costs, home changes or even lifestyle changes should be part of your financial planning. Having extra cash can help you avoid dipping into retirement savings too early or incurring penalties.

You might also consider setting aside “lifestyle” savings. Whether it’s funding travel adventures in retirement, tackling a long-delayed home renovation, or simply treating yourself, a little fun money can make this stage of life more enjoyable. And remember: Financial freedom also means being able to enjoy the fruits of your labor. So don’t hesitate to make room for joyful spending.

Your financial picture at age 60

At 60, the financial landscape is likely to be more complex. Retirement is either right around the corner or just around the corner, and your savings account, while important, is only one part of your overall financial picture. Continue contributing to your retirement accounts even as you get closer to drawing down those accounts, and make sure you have a clear plan for how and when you will begin withdrawing those funds.

An important point to keep in mind: Don’t raid your retirement account for everyday emergencies. That’s why it’s important to set aside enough savings. The goal is to keep these tax-deferred funds growing for as long as possible so they can support you throughout your retirement years.

If you still have debt – such as a credit card balance or a mortgage – you should focus on reducing that debt. The less debt you have before retirement, the more freedom you have to use your savings on things that matter.

Key insights

So how much savings should you have by age 60? While there is no one-size-fits-all answer, a good rule of thumb is to have six to 12 months of living expenses in a savings account. It provides enough cushion to handle unexpected expenses while keeping your retirement accounts intact.

When deciding how much to save, consider your healthcare needs, living situation, sources of income and any caregiving responsibilities. If possible, try to leave a little extra for travel, hobbies or other pleasures – you deserve it!

With a comprehensive savings plan in place, you’ll be better prepared to navigate this exciting and sometimes unpredictable phase of your life with confidence.