How Much Cash Should Retirees Keep in Checking & Savings. Are those in retirement saving too much?
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- Опубликовано: 29 авг 2024
- Many in retirement like to keep a decent chunk of change in their checking & savings accounts at the bank. Others like to have physical cash on hand. How much is too much or too little? Is there a proper amount to keep handy for financial emergencies in retirement?
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I paid off my $729k 2.625% 15 years loan in 25 months. Before my retirement I went into investment after my retirement and made more savings from it ..
You can get advice from a FINANCIAL ADVISOR .. who can guide you through investment
@@JessicaVerà-f7w I had no knowledge..but was guided by my financial advisor
I think I will try reach out an advisor before investing
Nothing wrong with going debt free in retirement.
Congratulations!
Personally, I would of invested the 729K. Promise you could have made a lot more than 2.65% on that money!
Enough that let's you sleep well at night. 90% in high yield savings (5.25%) , the rest in checking.
If your AC blows up that cost will be 10k-15k to replace,a roof if scheduled like most insurance companies are you might end up paying 8k-10k for a new roof.
Yes, I agree with your cost estimates for these two home repairs 100 percent (smile ... smile).
@@user-mb4wh2xf5c home repairs like a planned roof replacement are certainly a reason to build up the cash position.
Absolutely, I just had to have a new roof and my furnace is now on it's last leg!
Just bought a new heat pump last month $12k, paid cash , no worries 😊
Well done. Retirement income is such a different mindset. One has to re-think everything. It's so important to work with a retirement pro on this.
I retired at 63. We stuffed a bunch of cash in our mattress (around 5% interest) to qualify for decent Obamacare subsidies and avoid excessive Roth conversion taxes. Once we start Social Security at full retirement age or later we won't need as much cash. Thank you for the discussion.
@@dancurran8977 healthcare subsidy and income management certainly adds a twist to the cash situation. Excellent point. ruclips.net/video/-FgMc1oDzio/видео.htmlsi=8YAez4plOMFfFQfp
Yes; gotta keep income low for Obamacare! I will prob be there next yr?
I've got $30,000 in my HYSA, earning 5%. And, it gives me immediate access to my money with a debit card.
The question is; How much is peace of mind worth? $30,000 gives me the peace of mind that I can comfortably cover even the biggest unexpected expense.
@@bradh9800
.."IF"
IF there is never a grid/electrical failure.
Or, if a government entity doesn't FREEZE
all savings accounts or forbid use of ATMs and refuse to not replenish them.
Or you are mandated to be in your home
for a specific time.
The phrase "CASH ON HAND" is none of the above Emergency funds and aids are,
for example : whatever you need to grab
quickly (cash, a pre-stocked suitcase,, a box of food...all tossed in the car and you
can be exiting your driveway WITHIN FIVE
MINUTES.
(I keep my fuel needle above 3/4 and have a full four-gallon gas container in the
garage......so I can go at least 600 miles
without "stopping'".)
Cash, suitcase, bathroom kit, gas container, key in ignition...GO. 5 MINUTES.
It depends on how much money you have, and how much income. At 64, I have zero investments or assets - no 401K, property or stock. All of my limited funds are in a HYSA earning 5.25%. I get $5000/month from Social Security, pension and side hustle. 50% goes towards living expenses and the other half goes into savings. I earn less but take no risk and pay no taxes. Keeping it simple is my priority.
dont you have to pay taxes on your ss and pension?
For sequence of return? When the stock market goes down.
@@jn8559 Yes indeed, great point. We look at cash for spending to avoid sequence risk as a separate concern. This video is about the cash that isn't being spent, but just sits there. However, sequence risk (aka dollar-cost ravaging) is an important issue too: ruclips.net/video/gfvvXsVMs2c/видео.htmlsi=YPv2k-f1tXhkSlGx
yep - personally, considering todays conditions - 3 yrs minimum
Emergency = car repair, roof, home repair, medical emergency, inflation, etc….
My Sallie Mae Money Market account has check writing and is paying 4.65%. I have $75k in that and $240k in another money market account earning 5.25%. I keep $10-15k in a standard bank checking account for daily expenses.😊.
Enough so not to panic when my investments (IRA, 401k) are down.
Exactly. Avoid panic decision making.
I would add unexpected hefty condo assessments and getting dropped by insurance carriers especially for retirees who reside in Florida to that list.
This is definitely a top concern in Florida. Great point!
I just spent 20,000 to replace my septic field
That was not in the plan
@@clarencelipke6902 yes indeed. This is a great example of an emergency fund expense.
I had to put in a new well last year. $24,000.
Great example of emergency fund in any stage of life.
I have 20% of my savings in cash earning 5%. I’m happy with that for when the market crashes.
From my perspective how much you keep in cash really depends on what fraction of your assets that cash represents. Basically, if your cash allocation is 1-2% of assets the lost return is inconsequential. Also growth doesn't matter now that you are retired and drawing your assets down, particularly if you have enough in retirement income (SS, pension, etc) to cover your base expenses.
My magic number is $25,000. Have learned that in retirement unplanned expenses always come up (smile ... smile).
@@transitengineer We keep a bit more than that on hand, but still under 1% of our total portfolio.
I'm banking up my retirement emergency fund and it's called an HSA.
@@michaelb.8953 HSA is on top of the list for sure! ruclips.net/video/cJI-5yyelO4/видео.htmlsi=3RH0FLLxIQs6WoDs. The medical requirement adds a liquidity issue for it to be considered a true emergency fund. Saving old medical receipts adds to that withdrawal flexibility.
Checking and savings generally don't pay squat so keep as little as possible in there. We use mmkt mutual funds for savings yield.
I used to keep 70000 in my credit union then I discovered brokerage and cash management accounts that have debit cards and checks. Now I think 250000 in those accounts as cash.
Which company do you use? I know fidelity has a debit card.
Sorry guys, I could only watch 5 minutes of this video. If, we had a time machine and could go back to say 2018, when the interest rates on Bank checking, savings, and money market accounts were near zero, my number to keep would be a total of $25,000 ($20,000 in a savings account and $5,000 in my checking account). Now, in 2024, I can earn annual interest between 5.25 to 5.75 APY, in either a Certificate of Deposit (CD) or an on-line High Yield savings account. After the next stock market correction, I will be moving about $500,000 from fixed assets back into the stock market (smile ... smile).
@@transitengineer correctly timing the stock market is an extremely difficult task.
What's an emergency in retirement? Roof, car replacement, septic and leach fields, special med costs.
Great vid. I've been seeing so many people saying you need a year or two of your expenses to cover a down market. But that would imply that you are paying all of your expenses with your investments. With pensions an SS, that might not be the case.
Now, someone might want more in their savings to be able to maintain their lifestyle during a down market. And that's fine, but its not really an emergency fund then. Just a lifestyle buffer fund. :-)
Good discussion, because it forced me think. Like, what happens if I have a heart attack? Break a leg? Do I have enough credit to get by while waiting for an insurance payout? How about burglarized by people with a moving truck? A spate of funerals I need to travel for? A change of weight means needing new clothes. Etc.
I have 60k in my savings @ 4.6% apy with Sofi. It gives me peace of mind to have a years worth of expenses in case i lose my job. Also. Im building my cash bucket of the three bucket strategy when i retire in 5 years.
The fed is full of BS with their 3% inflation rate..90% of everything us retirees buy has gone up over 15%,food,utilities,insurance,gasoline ect.
Yes, you are correct there has been a 15 percent rise during the past 4-years since 2019. But, this equates to about an annual inflation increase of only 2.5 percent (with prices 2.5 higher in 2020, then 2.5 higher in 2021, then 2.5 higher in 2022, and then 2.5 higher in 2023).
Amen.
To me being on disability retirement, everything that comes up over and above my usual expenses is an emergency, because I don't have any savings left. I'm working on it by paying down my debt and I hope to take my income eventually and have an emergency fund. Some examples are: a storm that came through and took down several branches of my trees more than once this year for a total cost of $1,000; I needed repairs and maintenance on my whole house generator that cost $750. I also need to have work on my deck so it doesn't fall apart and that quote was over a thousand dollars along with some work that I need on my front sidewalk for 1,400. Oh and I took my car in for some warranty work and found out I needed to spend $1,500 on a new timing belt! Yay that all went on my credit card.
But, nearly 1/3 of adults have "maximum" their credit cards and many more have
limits well below $5,000..
More than 70% of adults are "paycheck to
paycheck".
Serious problems ahead.
You should ideally have enough money in cash or relatively available investment vehicles to cover all deductables and max OOPs. Then if you are living off investments you should have enough safe cash to weather down markets. I know people who have 5 years of expenses in cash. I think thats a little extreme but i get it at least.
Personally I keep an emergency fund that can last more than 3 years
But each to their own
Fool me once fool me twice I can't get fooled again.
All of it.
What is the wealth range that applies to the content in this video? Does your position change at a certain wealth level?
@@user-pp3dl8id7r Every situation is different. However, the main concept that cash/checking/savings shouldn't be used to build wealth doesn't change based on wealth level.
Furnace, roof, appliances used car so many things people have money in the checking account for.
Who calls what you have in your checking account an emergency fund except you guys when you want to berate the idea.
Most financial people are calling it an emergency fund. :-)
Buying an RV???...just give your money away...you'll feel better.
How about if you don't have pension. What if you only get $1521 a month from Social Security. What if your car needs to be fixed. How about if you need a new refrigerator. Mister you are a pinhead.