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How Much Cash Should You Hold in Retirement?

Rob Berger 92 views

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I've never quite understand this idea that you should have "cash" on hand for unexpected expenses or emergenciesunless of course you consider money invested in a mutual fund as "cash" And if you don't, that's why I don't understand your point If you need cash, sell a portion of your holding from a mutual fund, either a stock fund, bond fund, or index (either stock or bond) fundbrbrSo can you elaborate more on your perspective and the apparent subtly that I'm missing?
Comment from : @CostaMesaPhotography

Thank you, Rob
Comment from : @dianediliberto1876

You can tell this guy isn’t enjoying his retirement while he’s worrying about all this nonsense every minute of the day
Comment from : @Steve-qn8gn

I have 80 of my cash in gold bars and coins some in safety deposit boxes, some buried in marked spots on the ground The rest is in bank savings accounts!😊 I am 52 years old!
Comment from : @Agent77X

It's funny because realistically there cannot be an answer to "How much cash to hold" because it is highly variable based on individual situations 3-12 months is probably a good rule of thumb for most people, but also, regardless of age, retirement status, spending, etc Other variables can influence how much cash one should hold For example, real estate investors should probably hold more cash than non-real estate investors Homeowners should probably hold more cash than renters Those with expensive houses and cars should probably hold more cash than those with modest ones The list goes on and on
Comment from : @OnCashFlow

In summary:br- one year of expenses br- 3-6 months emergency fund br- 70/30 portfoliobrbrDid I get right ?
Comment from : @DataTranslator

Can’t I sell some of my cds and buy a bit of stocks while it’s down
Comment from : @SuperDagod1

Nothing wrong with having 3,4,5 or years cash in CDs, earning 4-5 in the event of a stock market crash that takes five years to recover
Comment from : @SuperDagod1

If you want to buy more stocks during the down turn, don't you want to have the cash cushion vs selling bonds to buy stocks, which will require more rebalancing for X:Y ratio of stock and bond?
Comment from : @ach3322

Is cash trash if you are retired with a pension?
Comment from : @Lugnuts807

100 stocks is right for me 🤷‍♂brI don't see the point in bonds when you have a secure pension I would argue anyone under 40 should be 100 stocks, maybe even anyone under 50 Just my opinion
Comment from : @mplslawnguy3389

I believe investors should prioritize putting their cash to work instead of letting it sit in banks This quarter, we'll likely see greater market diversification I plan to invest approximately $350K of my retirement savings in stocks for the coming year, with the aim of generating significant returns and potentially millions
Comment from : @Greggsberdard

We've been retired for 8 years, we keep 3 years of RMD's, equivalent to 5 years of actual budget, in MM accounts 100 of the balance stays fully invested
Comment from : @jeffm6273

Morningstar did a video on the BOXX ETF as an alternative to holding cash The claim is the it mimics the short term bond but when you sell the stock it is recorded as a capital gain and not earned income thus a tax advantagebrbrHave you looked at this and if so do you have any thought?
Comment from : @kevpen68

A BIG need for cash can be emergencies for children and adult aged grandchildren!
Comment from : @bobfmirvine6652

When you sell stock from your taxable, sell bonds in your tax-advantaged accounts and buy stocks in your tax advantaged accounts (rebalance), you aren't a net buyer of stocks, though You are simply taking out your spending money from bonds and re-bucketing your stock allocation from your taxable to your tax advantages accounts
Comment from : @jeffroyed761

Thanks Rob great video! This is exactly what we need to hear because it's so much simpler The bucket approach is way too complicated and requires market timing just like you said not to mention all the cash drag
Comment from : @geraldbingham2626

New subscriber and love the content until I saw the Nut football on your shelf GO BLUE!!!!!!!
Comment from : @brutherford462

Overdraft protection works too!
Comment from : @lovematters7122

I see your buckeye football Go Bucks!
Comment from : @patrickmckeown3683

Timing is still luck & those who get it right should not attribute it solely to their “brilliance” Initial conditions matter a lot even as one attempts to do the “best” planning possible It is all about the future & surprises both positive & negative are going to be the norm, far more than people have been used even considering the past few years Even Gramps Warren Buffet pays homage to the luck-factor as a significant element of his successes 😊
Comment from : @Gengingen

uSMART balance interest, make savings more than just numbers, 46 annualized income, ready to invest, keep your money alive
Comment from : @SanSam-p7k

I have an aggressive portfolio with only 10 in bonds and only 2 in cash If I had kept 6 months in cash cushion I would have missed over 30 I've gained since last year's market boom I might sell off if the market turns bear, but for the time being I'm winning big, knock on the wood
Comment from : @phd_angel

Why not just use your cash cushion to buy stocks when market is down
Comment from : @eatingcleaner

Rob, thinking about the Fed TSP and a “60/40 Portfolio” I’m currently a few months from retirement and am allocated 65 C & 35 G I believe with the current return on the G that is better for the “bond” portion than the F fund Am thinking about changing equities to some combo of C, S & I Maybe 35 C, 15 S & 15 I brbrIn any case your thoughts on a good retiree 60/40 portfolio keeping funds in the TSP?
Comment from : @asandrik3124

Random question, is TRowe a good brokerage? I read good thing about them
Comment from : @obrienortega6942

I bought me some TSLA, PYPL and SOFI last month Investors are preaching buy the dip, some are selling without a concern should I too? I am asking because after a pretty good run Q1 I am up to 251k from 180k at the beginning of Q1 thanks to the likes of AMD and TSMC
Comment from : @JedziniakRuseth

Another potential reason: If retiring before 65, and you do not have post retirement employer paid healthcare, it is likely you will need to sign up for ACA (Obamacare) coverage Having a cash pool that can be drawn for expenses until Medicare kicks in helps to minimize the income (MAGI) that is used to calculate premiums And note that if you choose to start SS at 62, your entire SS withdrawal is considered income for MAGI purposes So relying on cash as much as possible until Medicare may result in considerable healthcare premium savings
Comment from : @joes295

I'm Retiring at the end of August 2024, at little over 62 I'm holding a Months expenses now, Severance will add another Month My CalPers will be 70 with Coordinated Social Security Social Security will be delayed until after I my deplete my 403b I'll take Social Security no later than 65 [with Medicare], unless I've gone back to work from boredom & have Healthcare
Comment from : @tedjohnson4451

Bond mutual finds underfprform momey market funds, css tbills for years last 5-10 years total return
Comment from : @holmeswatson5275

Bravo! How did you learn to do this and what is your secret to sticking with the plan?
Comment from : @timjones8295

To me, the bond-stock uncorrelation is a myth Currently, the interest rate has the tendency to fall, meaning the bond price has the tendency to rise Does it mean the stock price will fall? If both bond and stock prices going down in 2022 was a 1 event, falling stock price will be a 99 event when the Fed cuts the interest rate Comment, please
Comment from : @Tony-gr6zw

@RobBerger I noticed My Banking Direct in the video is not on all cards anymore Is there a reason why?
Comment from : @kylevoeller6614

Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs Retirement choices determine a lot of things My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k
Comment from : @michaelwiebeck3

Dream scenario during a crash would be a roth conversion, selling bonds in the IRA, moving that to the ROTH and buying stocks and paying the taxes with cash Trifecta!
Comment from : @markbernhardt6281

I am 10 cash, 10 foreign equities/ a mutual fund, and 80 US mutual funds I am 70 and social security covers over 1/2 of my expenses My cash is earning 45
Comment from : @rst90274

I would love for you to do a video sharing your thoughts about fidelity’s personal retirement annuity (FPRA) They have around 67 VIP funds available for investing, including the type that would create a boglehead’s type 3 fund strategy as you often discuss The main selling points of the FPRA as I see it is the ability to trade within this group of funds without having to report earnings for taxes purposes until they are withdrawn Secondly, it would be interesting to find an approach to tracking these VIP funds, as their ticker symbols do not appear to chart when entered into any of the charting platforms Love your advice and thought it was past time to let you know!
Comment from : @mikefox9271

Can you dedicate a show to just a discussion about how to invest during a market crash taking into mind cash holding in a retirement account
Comment from : @Christopher-j3x

Cash is a depreciating asset
Comment from : @pamcornelius9122

Whoever says "cash is trash" can give me all his cash
Comment from : @waichui2988

I think the people that should be worried are those of us who are retiring with less than a million I have only 650k in my Roth and I don't know how to grow it
Comment from : @cloudyblaze7916

Rob, what do you think about Alpha Architect's BOXX ETF as a means of holding a cash position It seems extremely safe and should result in lower taxes for most people
Comment from : @RolandRodriguezEsparza

Isn’t this mostly market timing of various kinds Any cash you hold is the same as selling your portfolio to that cash value
Comment from : @paulturner4419

What about that rebalancing thing when bonds are low, but stocks are up, like now? Do we sell stocks and buy bonds? How do you calculate how much to sell and buy going, either direction?
Comment from : @mongo2044

I finally moved my savings to a Prime Money Market account I'm already up about $600more than I ever made from my all my savings accounts I've ever had, combined!
Comment from : @TJDawgs72

Regarding Bonds going down with stocks only once in a 100 yearsbrIn 2008 and 2009, Bond returns were mixed and down a little at the same time as stocks Not as much as 2022, but still, it happened less than 20 years agobrbrIt feels like "once in a blue moon" events are happening more frequently as of latebrbrThat all being said, I agree that timing never works and the best thing you can do is set up your portfolio using the metrics you described and hang on tight Its gonna be what it is
Comment from : @4589-hl

I hold enough cash to survive 5 years brNothing will ever convince me to reduce this amount
Comment from : @rkw2917

Rob and others: in your asset allocation (for example (60/40 stocks/fixed income) do you include your emergency fund in your fixed income asset allocation? brbrPersonally I include my emergency fund, but not those funds targeted for a large expense due within 6months, for an expensive trip, for example brThank you Rob for your videos - very informative and “boglehead” compliant, which I like and do my best to practice
Comment from : @bbhillfarm

T Bills as an equivalent to a money market, interesting
Comment from : @huntsail3727

Didn't think I could learn anything from a Ohio State Buckeye! Surprise, surprise - appreciate your insights! Go Blue!! :)
Comment from : @shawnmiller1159

How about using the cash to rebalance by buying stocks with cash I hold 20 percent cash 5 percent bonds and 75 percent stocks
Comment from : @rogipaul

Recently bonds and stocks are moving together, so there is no safe place to store capital Any advice on "safer" funds would be appreciated Bonds still seem to be moving with equities in the latest bull market; any change predicted? Thx for all your advice
Comment from : @joetino4242

I plan on having 5 years' worth of cash which is $210K (retiring in South America) If the markets crash, I can just leave my investment withdrawals alone and bide my time until they recover I won't need $3,500 per month It is an overestimate, just to nail the beast down
Comment from : @randymillhouse791

Cash and cash equivalents are not “investments” even if they earn interest The interest on cash is largely just to keep up with inflation No real (inflation-adjusted) growthbrbrLove your show!
Comment from : @user-fs8tl7ni1w

Rob, isn't the idea of holding cash during a market crash not that you don't rebalance but that you don't draw from your investments at all during that time??
Comment from : @JM-rq1ez

how much money should be kept in savings ( not in CDs, FLOT, FLTR, etc ) ? We should minimize high yield stable investments Ordinary savings accounts do not pay much interest these days
Comment from : @rajavchari257

Can you do a video on the ways mutual funds end? Specifically, mutual fund mergers within the same fund family and liquidations? Can you give examples of popular funds that have done this? How can we protect ourselves from funds liquidating at market bottoms? Thanks!
Comment from : @origamicrane685

I'm probably holding too much cash but at 87 years of age I'm willing to eat the interest loss for flexibility and peace of mind
Comment from : @21737geb

My Fidelity checking earns 5 (they call it a cash management account) but I use it as a checking account and like I said it earns 5 a year like a CD Even during the zero interest days of the past, I was still getting about 2
Comment from : @torchy187

welp my mom and dad just retired and i still haven't im still at least 6 years away i failed you, rob I'm sorry
Comment from : @La_sagne

Hi Rob, another informative video Do you think Vanguard’s new Cash Plus Account would be an ok place to keep a large savings position? Thanks
Comment from : @tombkk1322

Thanks, I hope that's helpful to others as well
Comment from : @stephenjenkins117

His talk Sounds like my scenariogreat overview Thx RByur a most groovey guythe mostest
Comment from : @Idahomie

I keep nothing, I enjoy life I survived 4 crashes all ready
Comment from : @maguilla

The idea of diversifying into bonds vs holding cash seems like a distinction without a difference at least at today’s interest rates Both bonds and cash are “fixed income,” and with the inverted yield curve these days, cash is actually paying more than long term bonds, with much less risk If stocks go down, you can use this excess cash to buy more shares
Comment from : @kurtelia2212

I disagree with Rob's not having cash on hand With the world's political climate, cash and assets are very helpful should there be a sudden downturn At the moment, we are keeping 25 of our assets in cash (in a HYSA) It not only gives me peace of mind but positions us to be able to buy a property or extend a loan to family
Comment from : @tamib64

Given the actuary tables, being in my 70s, everything is now in CDs and money mkt funds It just makes sense at this point
Comment from : @thomasbruner854

I bonds
Comment from : @alanalbin1988

Subscribed…partially for the good advice…mostly because you have a ROM #1 on your shelf Good taste makes for good choices 😉
Comment from : @KB_Art

Rob do you include your various cash buckets as part of your bond allocation in your overall portfolio, or is it separate? For instance, if you use 70/30 and have a $1m portfolio, does the $300k implied bond allocation include all your cash buckets?
Comment from : @artstein9428

Thanks as always Rob I would like to see you address the issue of high returns for cash Is it still a mistake to hold more in cash when returns are 54?
Comment from : @stephenjenkins117

"cash in a checking account" is RISKY CASH
Comment from : @robertwalker5521

Since you mentioned early in the video that cash-like equivalents could be treasury bonds as in a bond ladder, I think is important to clarify that, when you say that you don’t hold cash for a potential long market downturn, you mean that what you ave in that case is the safe bonds in your asset allocation, but not just pure cash So, if say you hold 5 years of expenses in safe bonds, that is just part of your bond allocation and not separate cash
Comment from : @J-2024-v8i

I work in the oil and gas industry which is very cyclical many folks who have been up and down with price crashes have 4 to 5 years living expenses in cash CDs or MYGAs…just in case 🤞
Comment from : @mapmanlxii1715

If you place one years worth of cash to cover current year expenses, do you include this amount in total assets allocation Thanks
Comment from : @BB-cs3kk

Great advice Rob, especially about not keeping a large hoard of cash to weather a market downturn It makes perfect sense to just rebalance at least yearly when you’re retired just like you did while working Your videos have been a TREMENDOUS help and I am sincerely thankful for your common sense insights
Comment from : @BSimons-u6g

Are T- bills cash or are they bonds? It’s debatable, I can see both sides of the argument Ultra-short term bonds?
Comment from : @josh9231

Ron have you talked about RMD lately? Should you do it at start of year or wait to end? The money will be reinvested in personal account
Comment from : @rgarri6396

VUSXX buys the t-bills for me and sends me the interest It is a great money market mutual fund
Comment from : @evarlast

How much you hold in cash changes as you age We currently are looking at about 15 years to plan for (that takes us into our mid 90s) We no longer need much or any return since we do not have children to leave anything to So we are about 99 cash with only about 1 in dividend stocks As far as that stock goes, it is so little money that we could have it go to zero with no significant impact The result is that we can ignore the market
Comment from : @todddunn945

As a soon retiree, keeping my $401k on course after a rocky 2022 is top priority I have been reading of lnvestors making up to $25Ok R0I in this current crashing market, any recommendations to scale up my R0I before retirement will be highly appreciated
Comment from : @FraserRyan-oz2bj

Thanks so much for sharing that! That is huge in this higher interest rate environment
Comment from : @MariaLarsen09

Warren Buffett sure seems to be holding a bunch of cash
Comment from : @mmactc

To each their own Even in retirement, my planning model is 97 USA ETF Stock and 3 cash I manage (take advantage?) volatility by a 'sell one year of expense at each 10 gain' in bull markets, hopefully that is enough to cover through bear markets If it is not, I 'sell one month of expense at current market price' to mitigate the asset damage It becomes a game of managing forward time through the bull / bear market cycle
Comment from : @mikeflair6800

Is 21 of my life savings in cash too much?
Comment from : @joycewright5386

Rob, you mentioned estimated taxes I pay mine with bac 262 preferred rewards card and payusatax you get a float and make a spread on rewards vs the payusatax fee…whatcha think?
Comment from : @tracythompson1692

Here’s a thought brLong term stocks outperform bonds which outperforms cash brSo maybe keep 3 years cash to mitigate a stock market crash , put the rest in stocks?
Comment from : @pauleasthope3931