Podcast Episode 431: Am I Holding Too Much Cash in Retirement?
Prefer to watch? Click here to watch and listen on YouTube.
What does it mean to be financially “safe” once you retire and your paycheck stops? If you’re wondering whether too much cash could pose a threat to your financial future, you’re not alone. Many retirees want to know how their portfolio measures up.
In this episode of Money Wisdom, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® explain how cash fits into a healthy retirement plan, where it can help, and where it can quietly hold you back.
When Cash Is Valuable
You need some liquidity in retirement, and cash is often the best vehicle for that. Cash is a key part of a diversified portfolio, but make sure you know the purpose of each portion of your money. Investments in stock serve an entirely different role than cash in the bank. Generally, cash is for safety and immediate availability, while other assets are for growth.
The Limitations of Excess Cash
Even though cash provides liquidity, it lacks in other areas. While cash is safe from market volatility, it’s not from inflation or taxes. Interest rates may be around 4% for money market funds, but everyday expenses rise faster than that.
Cash should always serve a purpose in your portfolio, whether for emergencies, peace of mind, or upcoming expenses. But too much cash or too much in a low-yield stable value fund can limit your returns. The goal is to use cash with intention, not to avoid market risk entirely.
How Much Cash is the Right Amount
General guidelines typically recommend having six months of expenses in liquid cash. For example, if your monthly expenses are $10,000, that’s $60,000 in cash. You may need less or more depending on your circumstances.
The key is balancing security, liquidity, and growth potential. Understand your short-, medium-, and long-term needs, and use cash and other assets to achieve it. Everything, including cash decisions, must fit into your broader financial plan.
Interested in building a simple, actionable plan for your retirement and investment success? Get your free Money Map book by texting “MAP” to 800-757-0436.
Information presented here is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
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