Cash Management in Retirement | Bank Account Setup for Retirees
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- Опубліковано 24 лис 2022
- What bank accounts should you use in retirement? That's a question I received from a viewer recently. So in this video I cover the types of accounts you'll need, two bank account setup strategies, and tools to manage all of it.
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.
I keep one month expenses in hard Cash at home. Most 2 months of expenses in checking account (Capital One). 9 more months in HYSA (3% in Capital one). 4 more years of expenses in brokered CDs ladder, Treasury bonds and rest in Dividend ETFs in Schwab.
The 12 buckets of retirement 🎄thanks for this Rob!
Thanx Rob.
Very good practical information for those of us close to retirement.
Great info, Rob!
Great video. I have a similar setup with one of the major financial entities that you recommended
Perfect timing as I will be retiring next April.
I began retirement planning the first day out of college. I worked to live, travel and to retire.
Very comprehensive video.
One thing to add for risk management purposes I would not want to have all my assets at one firm. If your account gets hacked you could have your funds frozen for a while as they investigate what happened to it. For this reason I would want to have at least 2 separate institutions (say brokerage and bank account).
Another risk many people do not consider but which has bitten many, is having social security direct deposited into the same institution as the rest of your assets. If there is any kind of confusion or problem where the SSA thinks that fraud may have been committed, they can take and/or freeze your assets at the institution where you direct deposit and you are guilty until proven innocent. If you have everything at the single institution, you are in trouble. I recommend keeping most of your assets elsewhere, but have a checking account (and perhaps savings account with only a month or two of spending needs) in a separate institution, and have your SS check deposited to that checking account. My such account is at Chase Bank, and a regular monthly transfer is enough to waive the fees. A credit union is probaby better, if you have a convenient one nearby.
Having a local institution makes it easier to deal face to face if you need a cashier's check for a large purchase, or to resolve the inevitable problems that seem to happen to everyone now and then.
I agree with using multiple banks. That was more clear during the 2008 crash. Past 10 years have been stable and slowly the risk of a single bank fades. And of course FDCI limits.
Correct, don't keep all the eggs in the same basket. Dont use these "free" apps and tools, they keep all your passwords having zero liabilities.
Happy Thanksgiving Rob!
You, too!
@@rob_berger C’mon Rob, don’t be lazy now. Type it all out, “Happy Thanksgiving to you too” 😂
Really helpful and well-timed for me! I recently sold my house and have been studying how to manage the proceeds I didn't immediately need. Turns out I'm not far off from your suggestions but you gave me a couple of ideas to look at. Many thanks!
Thanks for the discussion. Have you looked into any of the M1 Finance "smart transfers" capabilities? I know they are creating a HYSA sometime soon. It looks like one would be able to create a "waterfall" process of transferring investment gains (dividends/cap gains) -> HYSA -> checking (M1) -> checking (brick/mortar). Curious on your thoughts on this. Thanks.
Haven't had a brick & mortar account in the past 10 years. I use Fidelity Cash Management with it's various tools including ATM reimbursement. Its a bit like cutting the cable cord, a bit tense at first, but becomes comfortable pretty quickly.
Agree 100%! Plus you can earn 5% automatically in your checking with any idle cash, and it takes 2 seconds to transfer money from any of my reserve or brokerage accounts. No fees and free atm use (they just refund any bank fees charged at the atm)
@@sknorling Really 5% how? serious question, I only see 2.72 on Fidelity site for CMA checking yield as of the same day of your reply.
@@tVideoUTube yes, 5% on idle cash. All cash can automatically go into SPAXX money market fund. I just set up a brokerage account and label it as checking for my day to day spending. Comes with check writing, etc.
@@sknorling I use Vanguard for brokerage and Roth IRA. Wealthfront for 99% of my checking needs. Ally for the 1% other checking needs (writing checks and for some reason my sewer company needs a voided check so I had to use Ally not Wealthfront). I am considering switching to Fidelity so I can have one website instead of three to manage my finances.
@@tVideoUTubeThat’s what it is now, I don’t recall it ever being 5%. But they do have an updated cash manager tool for cma accounts that makes it easy to maintain a lower balance and keep most of your cash in a brokerage account where you have higher yielding options.
I like keeping it simple and I'm fine with the options at Vanguard. We have a checking account at a local brick and mortar credit union and we minimize what we need to keep in checking to pay bills. We then transfer excess money to Vanguard to keep it invested in various types of funds. We have a few credit cards to earn cash back and points while never paying interest. Works great for us and is simple rather than spreading things out with multiple brokerages.
Question for Rob and others. I am recently retired and handle my own finances. I'm looking for some financial planning software to backcheck my decisions and to look at all of my investments comprehensively. Would u recommend New Retirement or Personal Capital?
Thank you, Rob, for all the great information.
Excellent! We are a retired couple in our 60s with no debt, no major expenses and plenty of savings in taxable retirement funds.
Say we need $100k to purchase a house beyond the cash from the sale of our old house.
One option would be to take out a $100k mortgage and keep our income in the 12% federal income tax bracket.
Paying as much towards principal as we can each year.
The other option would be to take $100k from retirement funds, so no debt,
but our 2023 federal income tax bracket would likely rise to 24%.
What type of professional would be best to advice us? Certified Financial Planner™ (CFP) · Chartered Financial Analyst (CFA) · Personal Financial Specialist (PFS) ·Enrolled Agent (EA) · Certified Public Accountant (CPA)? Thanks.
I'm also a big fan of Personal Capital, usually, but I have to say that their biggest weakness is keeping their aggregator working/linking with financial/investment institutions. They seem to have much more problems than say Mint (or Yodlee). When everything is linking, they are the best, but when things go down, it can take weeks, months, or never, for them to restore links. That can become a big problem when the break occurs with your main bank (like right now, Ally Bank is no longer updating and it has been down since Nov 21st) or your main investment firm (like it was a couple of years ago when the link broke for Vanguard). And because you don't pay for the Personal Capital app, you don't really have any room to complain when the aggregator misfires.
I will 2nd this comment regarding Personal Capital! I've had my account at Fidelity stop synching and several others too. It actually caused a sizable gap in my net worth for about 6 months. Many attempts to reach them were followed by generic "don't call us, we'll call you... we're working on it" messages. And when they did finally fix it, they never told me... it just started working again. What can you expect for free I suppose.
You NEED a "brick and mortar bank" if you ever need to get a "Medallion Signature Guaranty." In my area, unless you have an account at the bank, they will most likely NOT provide this service. One reason you might need this service is because of certain brokerage account changes requirements, and also Treasury Direct requires it, if you try to change bank accounts. (I Bond Purchases, treasuries, etc.)
GREAT Video Bob.
FYI - Treasury Direct no longer requires this. You can add and change banks on line only. Not often said about anything related to the Treasury Direct site, but it was actually very easy and quick for me to add additional bank accounts.
@@aina07 Wow, great news!
@@aina07however you have forgotten your password and you want to reset or change your password...GOOD LUCK. Their Email request for assistance results in a return email telling you to call them. I have waited on hold over 60 minutes twice, and still not gotten through. Treasury Direct is an abomination.
Thanks for the tips Rob, especially regarding brokerage banking services.
The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point. I came across an article highlighting individuals who achieved profits of up to $150,000 during challenging market periods. Considering this, I am curious about the best stocks to purchase now or add to a watchlist.
I'm pleased to have come across this conversation. Could you kindly provide me with the contact information of your investment advisor? I am in urgent need of one.
Thank you for providing this helpful pointer. I managed to find the contact information for ROCH DUNGCA-SCHREIBER , and she appears to be highly skilled and adaptable. I have scheduled a call session with her.
Thank you for providing this helpful pointer.
Scammers gotta scam. Hey, UA-cam… do SOMETHING about these chat scammers.
Great video, Rob. I initially had everything at one place, but I found I needed a bit of a buffer to stop me from making rash trade decisions. So... checking/savings accounts are separate from brokerage accounts for me.
I have been sitting on the fence about moving my banking to Fidelity (where all my retirement accounts are). I think it is more of a mental thing right now. I might just set it up and put funds in it so that if my traditional bank pisses me off I can quickly move over.
It has been over 5 years since I have actually had to go into a physical bank.
I divorced my bank, BOFA. All on schwab. So easy and service is top notch, 24x7. Did it all in one month, at age of 54.
Great information Rob. I have a credit union checking account that I pay bills from (physical checks and online), and a checking account at Schwab that I keep most cash, and have my pension deposited. I transfer enough money to cover bills from Schwab to the credit union each month. This is done automatically. That way if my CU account gets hacked online, I won't lose all my cash. It's working so far (19 months) in my retirement. You need a neon "Rob Berger show" sign on the wall behind you to add some pazaz and color.
pizazz
Rob. Appreciate your videos. Can you do a short section on how card points translate to $ for one of the cards you recommend?
Thank you Rob for this awesome video! Which brick and mortar bank do you recommend with no fees (with low minimum checking balance) please? I notice some banks have $0 in monthly fees but they charge $25 or more on incoming/outgoing wires, which makes any monthly fees. Have you found a good brick and mortar that also has no wire fee?
this can apply preretirement as well. use a checking/savings for your direct deposit and spending and payment accounts. if your bank doesn't have a local branch open another account that will have a local branch as well( i.e for financial documents that need a notary or medallions). consolidate your retirement accnts if you can when you change jobs to keep easier track. take out excess earning from each paycheck you don't need for your monthly expenses before spending( you can always adjust the pay yourself amnt later if too aggressive) and park it in a money market fund earning higher interest. from that money market fund draw money for aftertax investments whilst maintaining a balance for emergencies. pay large recurring bills ( home and car insurance, utilities etc..) with the CC with biggest rewards to get the points and pay off monthly. if you have CC debt don't bother investing till you pay it off.
I was thinking the same...why would retirement change anything other than inflow of one check? IMO I've a few people go a little nuts when they retire and make big changes almost like they though big changes were required. I retired 21 years ago at 45 but didn't realize I had retired until I was about 55. Thought the money would run out and I'd go back to work at some point...but the money never ran out. I loved my career as a software engineer so going back to work wasn't a fear. Just enjoyed the freedom of not going to a job everyday. Still wrote code everyday because I enjoy it.
@@MrWaterbugdesign i agree. retired at 55 from being a physician last yr at 55. i could easily go back even part time but then i remember why i quit in the first place. so far no big changes in my plan except implementing the roth conversions previosly planned in spite if the market gyrations..
Some saving accounts have limits on cash withdrawals.
Not sure why you don't recommend credit union for cash management. I like using credit union accounts for two reasons, all of the funds are controlled by local folks who you can see face to face and I can go to quarterly board meeting where I can voice any issues concerning my account.
I think you need at least 2 credit cards maybe 3. Plenty of times your card will get stolen, hacked etc. So while a new card is being sent to you you should have at least 1 backup to switch stuff onto and it might make sense to have 1 credit card that is only used for auto payments and nothing else., it's probably less likely to get hacked or stolen. I tell you it's a real hassle once or twice a year to re establish auto payment programs just because your card got stolen. Plus having one card for just subscriptions or auto pays for utilities etc sort of gives you a very fast idea just what your auto payment output is each month or so.
I gave my husb a new slim wallet with built in RFID protection. We also use a low limit CC for online buying and NEVER keep any banking info and limited personal info on our phones. We’re well aware by 2030 CBDCs will rolled out and global banking money system tokenized on blockchain. Big banks, CBs and big corps have put billions into it over last 20 yrs or more. AMZ admitted working on Ai for 60 yrs. EMs will prob switch by 2025. Pros and cons. Big change.
Have a mid-6 figure sum that is our kids inheritance in 10 to 15 years. What investments will retain the most purchasing power? Thanks
Another factor in evaluating banks/brokerages is their functionality for designating a representative(s) to manage your cash when you become incapacitated. Institutions have varying abilities for this. A predetermined and clearly documented process to pay bills when you are unable to is important.
Designating beneficiaries upon death for each account should also be dealt with. My brokerage accounts fully support this; my bank doesn’t.
And of course ensure your web of accounts is fully understood by your spouse.
It is easy to set up any bank account with a payable on death beneficiary. All they have to do to access the money is provide a death certificate.
How long it takes to get $30k as credit card rewards? And how many credit cards being used? That’s that include the bonus cash reward?
Could you speak to credit unions? We have one that has so many benefits. Low cost credit card, free bill pay and checking accounts and CD.
Most in Canada have/ being taken over by larger banks who don’t change the name to give illusion it’s still independent. Google some credit unions in US and who largest shareholders are. Maybe a surprise.
@@jmc8076 GOOD point..happened to me in Florida
I find that the safest and easiest way to track all my accounts is to use a simple notebook. If you prefer a digital method, set up a spread sheet on a dedicated computer that is off line and NEVER connected to the internet. I would never use an on-line tool.
You make cash management sound difficult. It really isn't. My method is -
1) keep checking accounts at local (not national) banks. Set up your social security, pensions, RMDs, etc. to deposit to these accounts.
2) set up a small (
You sound like me. Lol
Only been retired from real job 18 months, still work PT/FT as painting contractor whic was a side job for years when I was working ft
I keep all my spreadsheets and account information for all accounts on a computer NOT connected to internet …
3 CC, main one for normal use and everyday expenses 1 for online/subscriptions and one for backup
Debit card for atm cash only
Could go on and on , we like minded
@@g.t.richardson6311 sounds like you have it nailed.
@@todddunn945 ha ha you too
Hey all, I couldn't find an answer to this question, so I thought I might give it a go here. I'm planning to diversify some of my funds into Vanguard Bond ETFs, but I couldn't understand how yield to maturity and coupon rate affect my returns.
I do briefly know the differences but let's say, for VGSH, YTM is 4.6% per annum and coupon rate is 1.7% per annum.
At the distribution date every month, will I be receiving only the coupon-rate dividends? If so, how can I be eligible for the 4.6% YTM p.a. return? Do I need to hold the ETF for 1-2 years to be eligible for that? And how does the calculation work? Would appreciate if someone could help me understand this. Thanks in advance!
excellent video! i plan on retiring soon and im thinking about moving everything over to either Schwab or Fidelity,, the one that has the best brick and mortar branch by me with competent advisors and personal help..sometimes its a pain in the butt to deal with issues over the phone and i prefer that personal service since i would probably be considered a high net worth individual and dont want any clown that thinks he's a wall street cowboy shrinking my net worth ..maybe do a video someday for upper tier brokerage/wealth management firms like JP Morgan,,Merrill Lynch,,UBS,,Morgan Stanley etc etc..
All this is pretty complicated. I am thinking of my wife should I drop and how she is going to handle our money.
I’ve found that none of the Personal Cap and similar accounts will download all of my accounts. I need an app that will allow one to add transactions manually. As one gets older simplicity becomes ever more important, more so than returns.
I use Mint to track spending and income with Personal Capital and find it works well. You can add transactions manually with Mint.
I have one retirement account and 2 brokerage accounts. I enjoy your videos and per your disclaimer, how can one enlist services of a registered/licensed advisor? I’m retiring in 6 months. I've read that they are better equipped to look for opportunities in bear markets anyway.
Isn't it risky to link your accounts to an organization like Personal Capital?
Can u pay only cash and not touch Roth or 401k until 70
First Rob you have to have accumulated some wealth to be able to use cash management ? How many seniors after the blow out in 2008 were able to or were willing too hop on the stock market investment game one more time! Seniors are house rich and cash poor today and using house equity to exist? My opinion only.🇨🇦
Sadly true even for the newly senior over last 2-3 yrs. But for most who had a bal diversified portfolio like 60/40 or 50/50 and stayed it was a temp pain. Living off 3% vs 4% incl lowering any/all expense possible and incr income if/when possible also helped. Mar 2020 was ~30% crash then a quick return up. The global banking money system isn’t what it was in 2008 and things will happens much quicker. All being tokenized and digitized as we speak. By 2030 all will look much diff.
You didn’t mention that Personal Capital also offers a cash account currently paying 3.35% APY 😉
I would not put money into bonds right now. When interest rates go up bonds go down.
Yes there’s an inverse relation but the role they play in a portfolio is a more of a ballast for many. Also good index or ETF funds with mix of short, med and longer term bond weighting. Then just have to rebal annually unless large pump of dump. ✌️
Any perspective on the fees charged by "Brick & Mortars" compared to "Brokerage houses"? Thanks, Happy Thanksgiving to all!
You should be able to find no-fee accounts at both.
In 57 years as a customer of PNC bank I have paid ZERO in fees, ever.
I’m 62. Pnc, Good loan rates, bad cd rates, good points card.
Backup accounts at local credit union. Zero fees
Good cd rates, not as good loan rates, good cash back card.
Mix and match.
your gold framed picture behind you is very crooked!
Too much risk for me to have everything at one broker account. I have 4 broker accounts at different brokers.
Sounds like a management nightmare to me.
I have been using Quicken for years to track multiple investments accounts and spending. PC version has a very good retirement planner. We have set up our saving/cash/check writing with a Lake Michigan CU that is paying 3.00% on Max Rewards account...CU are good place to research cash management needs.
Quicken is great. Excel can fill in any holes for reports.
Talked to my millionaire uncle (been investing in Vanguard funds for 30 years) last night and asked what advice he would give investors in today's market: "If you're a long-term investor, you should be buying stocks now. Ignore the recession news, it doesn't matter over the long-term." I mean i was at a seminar and the host spoke about making well over $880,000 within 4months of investing $150,000 i just need to know how.
Stick with advice from your uncle. Forget seminars and read good books - not ones on being rich fast or thru owning mult homes etc. Husb’s retired friend worth 10s of millions lives off ~$60,000 USD per yr for daily living. Not cheap just smart. He and longtime GF paid for kids/Grandkids education, first cars (modest reliable) and taken many trips incl London for a month to visit kids. He’s given good advice.
“I believe that the biggest mistake that most people make when it comes to their retirement is they do not plan for it. Congratulations you made it to retirement-now what? Investing in retirement is much different than investing for retirement. This is because you finally get to use those savings to live the life you’ve worked hard to achieve. Learn how to wisely withdraw and invest your retirement funds to make sure they provide the income you need, keep up with inflation, and last as long as you need them.
Retirement planning starts with thinking about your retirement goals and how long you have to meet them. Then you need to look at the types of retirement accounts that can help you raise the money to fund your future. As you save that money, you have to invest it to enable it to grow.
A 2020 survey from Schwab Retirement Plan Services found the average 401(k) participant thinks they'll need $1.9 million to retire, a 12% increase from the previous year's survey. Of course, many people in the U.S. aren't investing enough to reach that savings goal-and the income it brings.
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made! Thanks for sharing!
My wife and I both have SEPs invested in stock/bond mutual funds, ETFs, and Index funds. Don't anticipate needing any withdrawals until 2025. With the current market turmoil, would it make sense to suspend dividend and capital gain reinvestments and save the cash (re-evaluate market conditions each quarter). We are early 70s and have cash in taxable accounts for 2-3 years. Thanks.
Yeah explain how FDIC covers $1.2 million deposit of cash when the rules state $250K per account per bank customer(s).
At Fidelity, and other brokerage firms you are able to purchase "brokered CDs" from multiple banks via the brokerage, for example you could purchase 5 CDs for 250K each through the brokerage company so the 250K insurance is per bank and not the brokerage firm. I have found rates are even slightly better through the brokerage firm than going directly to the bank.
@@suzycreamcheese8888 very true
Interesting advice vs the current global economic climate.. can't say I agree with the majority of it, perhaps if it was still early 2019 this would be advice to follow. In 2023, absolutely not.
I used to use ING Direct several years ago, but now using Goldman Sachs (Marcus). They offer a fairly competitive MM rate. You can usually get cash withdrawn and transferred back to checking in 2-3 business days.
No.gonit.you.mistocar.