Ask Terry Questions Cash in Retirement savings?

Cash in Retirement savings?

By Terry Savage on December 30, 2019 | Chicken Money

What percentage of my retirement savings should be in cash/CDs?

Terry Says

That’s a great question — and one that I cannot answer blindly. A lot depends on your age, the total amount of your assets, your lifestyle spending needs, and your own personal tolerance for risk.
As a general rule, (unless you have a HUGE amount of savings that you want to grow for your heirs), you’ll get much more conservative as you get older. A bear market in stocks could — and historically does — wipe out 33% of your assets very quickly. And it could take years to recoup those losses and break even. All the while, you would be needing to take out cash to live on!

There’s an old saying: Sell down to the sleeping point! If you’re writing to ask this question, I think this issue of “asset allocation” may be keeping you up at night. There’s nothing wrong with “chicken money” — money in CDs — at this stage of life. Your only risk is that inflation returns over your foreseeable lifetime, eating into your buying power. But short-term CDs will solve this problem as interest rates will rise along with inflation, keeping you about even on that score.



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