Unexpected expenses take about 10% of retirees' income, research shows

Research from the Center for Retirement Research finds 83% of retiree households face unplanned expenses in any year, and among those households the average annual amount is about $6,000, roughly 10% of yearly income.

New research from the Center for Retirement Research at Boston College examines how retirees cope with unplanned costs. The study uses data from 3,427 retired households drawn from the 2000–2020 Health and Retirement Study and the Consumption and Activities Mail Survey at the University of Michigan. It compares the frequency and size of unexpected outlays with available cash and retirement assets. The report notes gaps between typical outlays and the cash households hold. Key findings: - 83% of retiree households face unplanned outlays in any given year. - Among households that experience unexpected expenses, the average annual amount across retirement is $6,000, about 10% of yearly income. - About 58% of retired households have enough cash to cover unplanned costs for a single year. - The report finds around 16% would tap retirement accounts and about 27% would still fall short after using all cash and retirement assets; it also notes roughly 40% do not have enough cash to cover even a single year of unplanned expenses. Summary: The findings indicate that unexpected costs are frequent in retirement and can represent a meaningful share of annual income. Undetermined at this time.