Moneywise and Yahoo Finance LLC may earn commissions or income through links in the content below.
During your working years, it’s important to have cash savings for unplanned expenses. These could range from home repairs to medical emergencies and a period of unemployment.
But what if you are retired and therefore rely on your savings and investments to fund your lifestyle? In that case, the guidelines for having 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 protected from market fluctuations.
Below are some reasons why you’ll need cash as a retiree.
While Social Security provides income, the average benefit of $1,976 per month may not cover all expenses. Once spent, cash allows you to handle surprises like car repairs or home maintenance without selling stocks or depleting your savings.
If you want to grow your savings more efficiently, you can do so with a high-yield cash account like the one Wealthfront offers.
One way to do this is with the Wealthfront Cash Account, which can help you build an investment foundation 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 customers can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on their uninvested cash. That’s more than ten times the national savings and deposit rate, according to the FDIC’s October report.
With no minimum balances or account fees, plus 24/7 withdrawals and free domestic bank transfers, you can ensure your funds remain accessible at all times. Additionally, Wealthfront Cash Account balances up to $8 million are FDIC insured through program banks.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150 billion fortune. Start using them today to get rich (and stay rich)
For workers, an emergency fund doesn’t just protect against job loss. It can also be the ticket to cover surprise expenses without going into debt. And being retired doesn’t make you immune to surprises.
Many retirees face home repairs as their properties age with them. Your monthly Social Security check may not be enough to replace a water heater or cover hospital expenses if you encounter a medical emergency.
If you’re worried that Medicare won’t cover your expenses, there are other insurance options you can consider.
Long-term care insurance offers coverage for the costs of home care, 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, which could strain their finances.
When considering long-term care insurance, GoldenCare offers different options depending 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 healthcare expenses with relative ease. If you have several health problems, it’s a good idea to stockpile extra money in case your bills start piling up at a time when it’s not advantageous to take advantage of your investments.
You likely have most of your retirement savings in an investment portfolio that includes stocks, bonds, and mutual funds. The advantage of holding these investments in retirement is that they can continue to generate growth, giving you access to more money. The downside is that its value can change depending on market conditions.
If you have a riskier portfolio more concentrated in stocks, you may want to have more cash available to balance it. If your portfolio is made up primarily of bonds, you may get 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, the value of gold has increased sevenfold in the last 100 years.
Opting for a gold IRA gives you the opportunity to protect yourself against market volatility by allowing you to invest directly in physical precious metals instead of stocks and bonds.
Priority Gold is a precious metals industry leader and offers 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, as well as free shipping and 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 your free gold investor package.
Just as there are different opinions when it comes to building an emergency fund for your working years, guidelines vary on how much cash you might need in retirement.
Remember that it is 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 provide you with a short list of certified experts to choose from.
You can then schedule an introductory meeting with no obligation to hire.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
