Less Than Half of Americans Have Three Months of Emergency Savings, a Share That Has Fallen Since 2021

A broken furnace is difficult enough. For retirees who lack a cash cushion, it can also mean an unexpected tax bill and a forced sale at exactly the wrong time. Here’s a look at who has a buffer, who does not, and where the safest place to keep one may be.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Less than half of Americans have enough savings to cover three months of expenses in an emergency, and new survey results show that the percentage is slipping.

That leaves many households vulnerable to costs that rarely make it into a budget, such as a broken furnace, a leaking roof, or an unexpected hospital bill. Here’s who has a cash reserve, why it has thinned, and why it becomes even more important after paychecks stop.

More Households Are Short on Savings Than Three Years Ago

The FINRA Foundation conducts the National Financial Capability Study. In its latest round, 46% of respondents said they had set aside rainy-day money to cover three months of expenses in the event of illness, job loss, an economic downturn, or another emergency. That is down from 53% in 2021.

The decline ended a steady increase that started in 2009. The figures come from the study’s most recent wave, which surveyed more than 25,000 adults.

A rainy-day fund is money you can reach quickly without selling assets or borrowing. Three months of expenses is a common benchmark, and for the average household, it adds up to a meaningful sum. The Bureau of Labor Statistics placed average annual household spending at $81,905 in 2025, which works out to about $20,476 for three months.

Age and Income Divide the Picture

The share of adults with three months of expenses saved varies sharply by age, according to the FINRA Foundation:

• Ages 18 to 34: 36%
• Ages 35 to 54: 40%
• Ages 55 and older: 59%

Older adults have had more time to build savings, so they lead by a wide margin. Income has an even bigger effect. Only 22% of people earning under $25,000 have the cushion, compared with 66% of those earning $75,000 or more. When monthly budgets are tight, there is often nothing left to save.

Why the Cushion Has Shrunk

The broader savings backdrop adds another concern. The personal savings rate, or the share of after-tax income people do not spend, fell from 6.9% in the first quarter of 2024 to 4.1% in the third quarter of 2026, according to the Bureau of Economic Analysis.

That does not fully explain the earlier decline in emergency funds, but it does show how little income Americans are setting aside. With less left over each month, rebuilding savings after a setback becomes harder.

Retirees Face a Higher Cost When Trouble Hits

Without a paycheck, every surprise expense comes out of savings. Many retirees keep their largest balance in an IRA, and tapping it can be costly.

Traditional IRA withdrawals are treated as taxable income. Anyone younger than 59½ generally owes an additional 10% tax on top of that, according to IRS Publication 590-B. A special emergency withdrawal can avoid the 10% early-withdrawal penalty on up to $1,000, but regular income taxes still apply.

Selling investments at the wrong moment creates another cost. If the market is down when the furnace fails, a retiree may need to sell at depressed prices to get cash. Those shares are gone and cannot recover. Keeping a separate cash reserve allows the portfolio to stay invested until prices improve.

How Much Retirees Usually Keep

Typical guidance begins with the gap. Social Security and any pension already cover part of monthly spending. The emergency reserve is meant to cover a set number of months of what remains. Retirees often aim for more months than workers do because there is no paycheck coming in to refill the account.

Consider a hypothetical retiree. If monthly spending is $4,000 and Social Security provides $2,500, the monthly gap is $1,500.

Six months of that gap equals $9,000.

Saving that amount over a year would require setting aside $750 a month. These are only example figures, so they should be replaced with your own spending and benefit numbers. The approach is the same at any income level.

Where the Money Belongs

An emergency fund should be safe and easy to access. Four places fit that purpose:

• High-yield savings accounts: Bank accounts that pay more interest than a standard savings account. FDIC insurance covers $250,000 per depositor, per insured bank, for each ownership category.
• Money market funds: Brokerage funds that hold short-term debt and aim to maintain a stable share price. They are not FDIC-insured.
• Treasury bills: Short-term U.S. government debt that matures in one year or less.
• CDs: Certificates of deposit lock money in for a fixed term at a set rate, usually with a penalty for early withdrawal. Bank CDs receive the same FDIC coverage.

Many retirees split the fund, keeping one or two months in savings for immediate access and placing the rest in T-bills or CDs that may earn a bit more.

One Account to Open or Review This Week

Fewer than half of Americans have three months of expenses saved, and the share continues to fall. For retirees, a missing buffer can turn one repair bill into both a tax bill and a forced sale.

A practical step this week is to open a high-yield savings account, check the rate on one you already have, and set up an automatic monthly transfer. Even a small transfer starts building the cushion, and that cushion can help keep an IRA untouched when the roof starts leaking.