How Much Cash Should Retirees Hold?
From the Kiplinger Magazine website
Retirees tread a tricky line: Keep enough cash in their pockets to cover the unexpected but not so much that inflation nibbles away at their nest egg. However, in my firm’s experience, we find many retirees maintain only a fraction of the optimal level of cash.
We understand why people can be averse to holding more cash, given the abysmally low yields on savings accounts and CDs. We also acknowledge that longtime habits are hard to break.
Having said that, if you are in or approaching retirement, we strongly suggest taking another look at your cash levels.
There are several benefits to maintaining a larger reserve – some of which aren’t obvious:
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