When preparing for retirement, then once you are retired, good cash reserves and avoiding taxes are two big topics. I cannot tell you how much cash to keep in reserves, it is a personal choice. Some clients are comfortable with $15,000, some are comfortable with $200,000. I find my retired clients sleep better at night when they have cash on the sidelines. When the stock and bond markets crater, like they did in 2022, cash on hand is a welcome relief. Generally speaking, cash can be checking, savings, or money market accounts.

Taxes are a whole other factor in retirement. Some people think that they will not have to pay income taxes in retirement, then get an unpleasant surprise. Taxes in retirement are an important consideration and can eat away at a retiree’s budget. Withdrawals from a 401(k) are taxed as ordinary income. Social Security may be taxable. Dividends and interest may be taxable. Not to mention there may be property taxes, sales taxes and other taxes that may be invented down the road. It’s a taxing problem.

Take the time to review both of these topics prior to retirement, you will enjoy your retirement more if these worries are off the table.

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