At 68, I've just had an unexpected car accident. I've spent years saving for retirement — could this derail my retirement finances?

He’s facing a hefty bill, new transportation costs and potentially expensive changes to his daily routine.

For Americans on a fixed income, one accident can put considerable strain on their finances. New research suggests expenses account for about 11% of annual income. Worse yet, a reported 740 people are injured in car accidents each year, according to the Centers for Disease Control and Prevention.

Here are some things to consider if you find yourself, like Derrick, in a major financial crisis while you’re living on a fixed income.

Saving for the worst-case scenario

Car accidents can be expensive and are tricky to plan for because they are unpredictable. While it may be worthwhile to speak with a financial advisor to help you plan for your financial future after an accident, you should be aware that there’s no right answer in this case — and no way to predict how the chips will fall, especially given a licence being taken away.

The best advice is to prepare in advance: beef up your emergency savings the closer you get to retirement.

According to Kelley Blue Book, the cost of a new car has increased to $49,855. If Derrick still has a partner who can drive, that is a big expenditure. Some deals can be had, especially on small SUVs and compact cars.

“Consumers continue to gravitate toward more affordable segments, which is helping keep overall transaction price growth in check, but the steady flow of newer vehicles is providing some upward pressure on both ATPs and MSRPs,” Erin Keating, executive analyst at Cox Automotive, said in a statement.

If you are in the same situation as Derrick and were in a bad accident, first try to trim down your budget so that you can divert as much money as possible toward your care and the purchase of a new vehicle, or to cover transportation costs.

It’s important to be aware of the costs and budget for them as you recover from the accident and have to pay anything for care, insurance and a new vehicle.

Getting clear on your coverage

If you’ve been in an accident and you’re found at fault, you may still need an active insurance policy if your state requires it for filings, such as an SR-22.

Experts recommend paying attention to the different types of copays and deductibles that apply to your plan, and the annual out-of-pocket maximum payments that you could owe on any medical issues following the crash.

You should also have an emergency health care fund in place that covers your annual deductible. This fund may be the lifesaver that gets you through the first year of your cancer treatment with no major financial issues and gives you time to make a plan for the future.

Relying on Medicaid and Medicare

For those already in their retirement years, Medicaid and Medicare are essential lifelines for medical care. However, these programs don’t cover everything, so it’s important to keep your emergency medical fund in place after you retire.

Medicare is divided into four parts: Part A, Part B, Part C and Part D. If you’re eligible to receive Social Security benefits when you turn 65, you’ll be automatically enrolled in Medicare Part A, which covers hospital costs, and Medicare Part B, which covers visits to the doctor.

For the other parts of the Medicare program, namely Part C, also known as Medicare Advantage, and Part D, which covers drugs, you must enrol separately.

As a retiree, you should know that the standard Medicare does not cover routine dental, vision and hearing care, prescription drugs, long-term care, podiatry, routine physical exams, chiropractic services and massage therapy. Cosmetic, nonessential surgery and medical costs while you are overseas are also not covered.