As a follow up question - how much do other retiree's keep in cash (to cover living expenses). By cash, I mean bank accounts, MMF, under the mattress - but not short term bonds, not cash postions in mutual funds, etc. I'm not looking for a dollar amount, just the number of months/years of expenses. We have a little over 2 years worth of living expenses easily accessible, but that seems high to me.
As a follow up question - how much do other retiree's keep in cash (to cover living expenses). By cash, I mean bank accounts, MMF, under the mattress - but not short term bonds, not cash postions in mutual funds, etc. I'm not looking for a dollar amount, just the number of months/years of expenses. We have a little over 2 years worth of living expenses easily accessible, but that seems high to me.
So far, we are living on DW's take home pay and my dividends and cap gains, which are directed to a MMF.
As a follow up question - how much do other retiree's keep in cash (to cover living expenses). By cash, I mean bank accounts, MMF, under the mattress - but not short term bonds, not cash postions in mutual funds, etc. I'm not looking for a dollar amount, just the number of months/years of expenses. We have a little over 2 years worth of living expenses easily accessible, but that seems high to me.
So far, we are living on DW's take home pay and my dividends and cap gains, which are directed to a MMF.
As a follow up question - how much do other retiree's keep in cash (to cover living expenses). By cash, I mean bank accounts, MMF, under the mattress - but not short term bonds, not cash postions in mutual funds, etc. I'm not looking for a dollar amount, just the number of months/years of expenses. We have a little over 2 years worth of living expenses easily accessible, but that seems high to me.
Exactly what we do. I've only been retired for a year and a half, so I can imagine having to reinvest dividends at times, but there's no difference in tax impact in our taxable accounts - so easy peasy...I am not withdrawing from tax-advantaged accounts yet, but I do withdraw from taxable accounts.
First, I do NOT automatically re-invest dividends, but take them in cash. That gives payouts 4 times a year or every 3 months.
Then if I need additional cash, I look to see what I can sell with the least tax impact which usually means the shares with the highest cost basis or even shares with losses.
Then if I need to rebalance to get back to my desired asset allocation, I move some things around in tax-advantaged accounts where buying/selling are not affected by tax considerations.
gsparks2 said:I have direct deposit to checking of pension and 401k distributions. Dividends go to money market account I use for sinking fund for large planned and unplanned expenses. a significant portion of pension/401k also goes to sinking fund.
that is what I call it. It is an accounting term I think but it is a method allocating periodic sums to accumulate for a future large expenditure. I may be using it wrong.
I'm helping to manage a portfolio for an older relative and the low interest rates have caused us to scale way back on the bond holdings. Much of that bond allocation is now in cash instead, so (at least in this case) the lower interest rates have served to increase the allocation devoted to cash.Would you keep more cash if interest rates were higher?