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During your working years, it’s important to have cash savings for unplanned expenses. These could run the gamut from home repairs to medical emergencies to a period of unemployment.
But what if you’re retired and are therefore relying on your savings and investments to fund your lifestyle? In that case, the guidelines for keeping cash on hand change quite a bit.
Here’s what you need to know before you retire.
In the context of retirement, cash can mean funds in a checking or savings account, or certificates of deposit (CDs) —essentially, money that’s shielded from market fluctuations.
Here are some reasons you’ll need cash as a retiree.
While Social Security offers income, the average benefit of $1,976 per month may not cover all expenses. Once that’s spent, cash allows you to handle surprises like car repairs or home maintenance without selling stocks or draining your savings.
If you want to grow your savings more efficiently, you can so just that with a high-yield cash account like the one offered by Wealthfront.
One way you could do this is with the Wealthfront Cash Account, which can help you build an investment base through a combination of high-interest rates and ease of access.
A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over ten times the national deposit savings rate, according to the FDIC’s October report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
For workers, an emergency fund doesn’t just safeguard against a job loss. It can also be the ticket to covering surprise expenses without going into debt. And being retired doesn’t make you immune from surprises.
If you’re concerned that Medicare might not cover your expenses, there are other insurance options you can consider.
Long-term care insurance offers coverage for the costs of in-home assistance, nursing homes or assisted living facilities.
Without proper planning, paying for long-term care could deplete your retirement fund. In many cases, the burden of paying for care often falls on family members – potentially straining their finances.
When considering long-term care insurance, GoldenCare offers different options based on your needs, including hybrid life or annuity with long-term care benefits, short-term care, extended care, home health care, assisted living, and traditional long-term care insurance..
If your health is excellent, you may be able to cover your health care expenses with relative ease. If you have multiple health issues, it’s a good idea to stockpile extra cash in case your bills start to mount at a time when it’s not advantageous to tap your investments.
You may have the majority of your retirement savings in a portfolio of investments that include stocks, bonds, and mutual funds. The upside of holding these investments in retirement is that they can continue to generate growth, giving you access to more money. The downside is that their value can change based on market conditions.
If you have a riskier portfolio more concentrated in stocks, then you may want more cash on hand to balance that out. If your portfolio is largely bonds, you might get away with less cash, since bonds are less volatile than stocks and can provide predictable interest payments that you can use as income.
If you’re optimizing your investments for stability, gold is typically more stable than stocks during economic downturns and recessions. In fact, gold has increased in value sevenfold over the last 100 years.
Opting for a gold IRA gives you the opportunity to hedge against market volatility by allowing you to invest directly in physical precious metals rather than stocks and bonds.
Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver. Plus, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link.
If you’d like to convert an existing IRA into a gold IRA, Priority Gold offers 100% free rollover, as well as free shipping, and free storage for up to five years. Qualifying purchases will also receive up to $10,000 in free silver.
To learn more about how Priority Gold can help you reduce inflation’s impact on your nest egg, download their free gold investor bundle.
Just as there are different opinions when it comes to building an emergency fund for your working years, the guidance varies over how much cash you might need in retirement.
If you’re searching for financial advice, Advisor.com connects you with vetted fiduciary financial advisors near you. All you have to do is answer a few simple questions about your finances, and Adivsor.com matches you with a short list of certified experts to choose from.
