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While you’re working, it’s important to preserve cash for unplanned expenses. These can involve everything from home repairs to medical emergencies to periods of unemployment.
But what if you are retired and therefore rely on savings and investments to support your lifestyle? In this case, the guidelines for keeping cash on hand change significantly.
Here’s what you need to know before you retire.
In the context of retirement, cash can refer to funds in a checking or savings account, or certificates of deposit (CDs)—essentially funds that are protected from market fluctuations.
Here are some reasons why you need cash as a retiree.
While Social Security provides income, the average monthly benefit of $1,976 may not cover all costs. Once spent, cash allows you to take care of unexpected events, like car repairs or home maintenance, without having to sell stocks or deplete your savings.
If you want to grow your savings more efficiently, you can do this with a high-yield cash account from Wealthfront.
One way to achieve this is with a Wealthfront Cash Account, which helps you build an investing foundation with high interest rates and easy access.
The Wealthfront Cash Account offers a base variable APR of 3.50%, but new customers can get a 0.65% boost for the first three months, for a total APR of 4.15% offered by the bank on your uninvested cash. That’s more than 10 times the national savings rate, according to an October report from the Federal Deposit Insurance Corporation.
With no minimum balance or account fees, along with 24/7 withdrawals and free domestic wire transfers, you can be sure your funds are always available. In addition, the FDIC insures Wealthfront cash account balances up to $8 million through program banks.
Learn more: Warren Buffett turned $9,800 into a $150B fortune using 8 solid, repeatable money rules. Start using them to get rich (and stay rich) today
For workers, an emergency fund can do more than just prevent job loss. It can also be the ticket to paying for unexpected expenses without going into debt. Retirement doesn’t protect you from the unexpected.
As their properties age, many retirees face home maintenance issues. If you have a medical emergency, your monthly Social Security check may not be enough to replace your water heater or cover hospital bills.
If you are concerned that Medicare may not be able to cover your costs, you may consider other insurance options.
Long-term care insurance covers the cost of in-home assistance, a nursing home, or an assisted living facility.
Without proper planning, paying for long-term care can drain your retirement funds. In many cases, the burden of paying for care often falls on family members, which can strain 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, long-term care, home health care, assisted living and traditional long-term care insurance.
If you are in good health, you may be able to pay your medical bills with relative ease. If you have multiple health conditions, it’s a good idea to stash away extra cash in case your bills start piling up at a time when it’s not conducive to investing.
Most of your retirement savings are likely invested in a portfolio of stocks, bonds, and mutual funds. The benefit of holding these investments in retirement is that they can continue to generate growth, giving you more money. The disadvantage is that their value may change based on market conditions.
If your portfolio is riskier and heavily focused on stocks, you may need more cash on hand to balance it out. If your portfolio is mostly bonds, you may get less cash because bonds are less volatile than stocks and provide predictable interest payments that you can use as income.
If you are optimizing your investments for stability, gold is generally more stable than stocks during economic downturns and recessions. In fact, the value of gold has increased sevenfold over the past 100 years.
Choosing a gold IRA gives you the opportunity to hedge against market volatility by investing directly in physical precious metals instead of stocks and bonds.
Priority Gold is a leader in the precious metals industry, providing physical delivery of gold and silver. Additionally, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link.
If you want to convert an existing IRA to a gold IRA, Priority Gold offers 100% free rollover, 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 the impact of inflation on your savings, download their free Gold Investor Bundle.
Just as there are differences of opinion when it comes to building an emergency fund for your working years, there are also differences of guidance on how much cash you might need in retirement.
Remember, it’s never a bad idea to speak with a qualified financial advisor.
If you’re looking 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 will match you with a short list of certified experts to choose from.
You can then schedule an introductory meeting without hiring.
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.