Two years ago, I had a string of bad luck. First, I needed an operation to remove a small tumor. Then, my beloved Subaru Outback (with more than 120,000 miles) needed major repairs. And, most sadly, my colicky 13-year-old horse was rushed to surgery. She didn’t survive.
The whole series of events packed a wallop — emotionally and to my wallet, to the tune of well over $5,000. Although I had health insurance, the steep deductibles and unreimbursed medical bills for my surgery came as a shock. I didn’t have insurance to cover the horse’s vet expenses, though. So those costs plus my car maintenance were all out-of-pocket.
Fortunately, I had savings stashed away to cover these unexpected bills. But many people don’t — especially women. If you haven’t built up a proper emergency savings fund, you’ll probably be forced to pay rainy-day expenses by racking up your credit card debt, taking out a home equity loan or, worse yet, tapping into a retirement account. Not good.
The Gender Gap in Financial Literacy survey released this week by Financial Finesse, a financial education firm in El Segundo, Calif., revealed that women are much less likely than men to maintain a rainy-day savings account.
Emergency Funds: Women vs. Men Only 43 percent of women overall reported having an emergency fund, compared with 63 percent of men. The gap was even wider between women and men age 55 to 64. Just 58 percent of women in that age group have an emergency fund, while 82 percent of men do.
I found this news pretty disturbing. Emergency savings are especially critical in your 50s or 60s, when life can really throw you a curveball, from losing a job to unforeseen home repairs.
Yes, I realize this is a tough time to find money to stash away. So I have two suggestions:
First, figure out how much cash you need to set aside for a rainy day.You’ve likely heard ad nauseum from personal finance gurus that an emergency fund should cover three to six months of daily living expenses. But I think that’s probably not nearly enough, especially for women in their 50s or 60s. With rising health care costs and the average length of unemployment now lasting about 60 weeks for workers 55 and older, I recommend salting away at least a year’s worth of expenses.
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