How much post tax cash do you keep around?

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doneat54

Thinks s/he gets paid by the post
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I'm retired, DW is working 2 more years, we are not touching anything in our portfolio and (barely) living off her salary. We have been very cash strapped having bought a second home last summer, but are now selling a third property we have had since 1994 in a few weeks. Once all the fees, taxes are paid and the proceeds are divvy'ed to pay for a few other things next year, we'll still have a nice chunk of cash to deposit. Today, looks like it would be about 4.4% of the portfolio.


We have muni and bond heavy accounts in parts of the portfolio, but since DW is still working, we'd get hit at least 22% fed tax if we took any of it, so having a post tax cash bucket (again, finally) feels god for ITSHTF.


Curious what percent other have in post tax cash accounts in their portfolio?


Also, part of me wants to invest this cash in SOMETHING, but looking at CD rates and bank saving rates, why bother?
 
I agree. I like to have a nice fat stack of cash to use for expenses so I don't have to sell at bad times. Sits in the checking account and earns a tenth percent.
 
Aerides said:
recent thread:

https://www.early-retirement.org/forums/f28/how-much-cash-to-hold-in-retirement-106232-4.html
Click to expand...


I had read that thread, or most of it, and perhaps my situation is a little different in that with DW still working and that most of the cash and cash-like investments in the portfolio come with a bad tax sting, and I really don't want to touch it (now) unless I have to.

I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
 
Checking, MMA, ST Fixed Income in Brokerage Core account total ~5%.

And I have a low WR (due to pension income covering my routine living expenses).
 
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We're currently at about 2%.... about 1.5% or the 2.0% in an online savings account earning 0.6% and the rest earning ~1.5% in Toyota IncomeDriver Notes and Dominion Energy Reliability Investment Notes accounts.
 
doneat54 said:
I
I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
Click to expand...
This can get a little convoluted. I keep 3 years of expenses in Cash (banks, MMF, High Yield Savings, Roth MMF). That amounts to about 3% of my portfolio - your per centage will vary based on your costs of living. For purposes of cash flow the majority of my amount (about 2 years worth) are in accounts that pay taxable interest. The remainder is what is generated in my Roth by dividend payments.

All things considered. If you want to avoid taxable events, I'd flip the allocation around so the majority (2 years expenses) sits in a short-term bond fund or Money Market Fund in a Roth, and your quick/available funds is in taxable accounts (bank/credit union, etc.)

Rita
 
How post tax cash do you keep around?

Dave Ramsey had a caller yesterday who’s ailing father (87) had $500k in one hundred dollar bills. You can do a you tube search and find the clip. The man likes to stack cash.
 
Enough liquid funds so we wouldn't have to sell equities for at least 3 years. I don't worry about what % this may be.


I should also add that I keep enough cash in our HSA to cover 3 years of out of pocket max. The remainder of HSA is in S&P500 index.
 
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doneat54 said:
I had read that thread, or most of it, and perhaps my situation is a little different in that with DW still working and that most of the cash and cash-like investments in the portfolio come with a bad tax sting, and I really don't want to touch it (now) unless I have to.

I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
Click to expand...

I think most call that "cash". I see your point that some cash is in 401(k) index funds, etc. But I've not heard anyone make that distinction. When I report 5% cash target, that is money market, hi-interest account, CD's, checking and savings.

DW can continue to grow in her job and pay the bills! At least that is my motto.
 
0.09%

(51, single, one house, retired, spare cash is at Alliant Credit Union earning 0.55% APY last I looked. About to refill cash from taxable but waiting to see how December cash flow turns out - would like to defer capital gains to 2021 if possible, but it seems unlikely.)
 
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Currently we have about 5% in MMA's earning less than 1% and I'm OK with that. If the SHTF then we've got a couple of years of cash to live on before we have to start selling stock or bond funds.
 
Honestly, too much....
 
I'm at about 8% right now. A lot of it is in a CD ladder to supplement dividends for living expenses, and not take a whole lot of income for subsidy purposes. That amount will get lower each year until I hit 65, and I'll have to decide how much I want in cash then. Often I think I have too much in cash, but I figure it's safe and non-volatile and I can take a little more risk with the rest of my portfolio.
 
We have about 10% of portfolio in laddered CDs, MM and savings. Sometimes I think it is too much, but let’s us sleep soundly at night. It could cover around 8 years of expenses.
 
Post tax, I have $90K in my checking account and $5K in cash at home hidden away. Pre-tax I have $90K in a guaranteed savings fund. Percentage wise, $90K is 10% of my entire portfolio. I have a pension and SS that is more than enough so I haven't had need to touch either the pre or post tax cash assets. Or any of the IRA money for that matter. Things are likely to get ugly when I reach RMD age and have to pull some out. Maybe I won't need it, but that doesn't mean I'm going to be all happy handing over a chunk tot he government in taxes.
I don't set the limit based on %, but by the dollar amount. I can't think of any scenario that I'd need more than those amounts, so that is why they are what they are.
 
as in liquid-available-right-now? probably more than we should. rough math is about 12% in various interest bearing accounts.
 
Wow, folks are all over the place on this. Expected, and interesting.

I resonate with the popular "3x annual expenses in cash" bucket thing. But for us, now, it is just about tax free cash, vs. 22% taxed cash. Since DW will retire in a bit less than 2 years, I don't feel the need to have scads of tax free cash around. Within out portfolio (64% bond funds and cash) there is 8+x annual expenses and we will down size soon, so post DW retire I feel very confident we have enough to weather most any storm, and we may still move more out of bond funds into more stable munis for some additional hedge.


Thanks for the responses......
 
For us, cash (savings + checking + MM) = equivalent of 1 year expenses. This is the money we live on with no paycheck, no pension, no SS yet. If we anticipate a big ticket item next year, e.g. a new car, that money is added to the cash bucket. Bonds = equivalent of 4 year expenses.
 
Answering from now and forward, now that we've drained our taxable accounts. We keep Roths 100% equity. So post tax "cash" would be our 6 month withdrawals from IRAs to checking and savings accounts for current spending. Range from 2.125% to way less than 1%.
 
Far, far more cash than common sense. It's a good problem to have. Just one that should be managed better.
 
I also keep about $3,000 or so in small bills and silver coins in case things really hit the fan. I'm not a dooms day guy or prepper.
 
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