In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss one of the most common questions in Retirement Planning today: how much cash is too much cash? With Money market rates falling and Interest rates 2026 expected to continue shifting, many retirees are rethinking their cash reserves in retirement. What once felt safe and productive at 5% in a money market or CD now may be losing ground to inflation and creating unintended tax consequences.

Listen in to learn about how a proper Retirement financial plan helps determine the right balance between liquidity and long-term growth. Whether you’re saving for retirement, saving for retirement at 50, or already focused on Retirement income planning, this episode will walk you through how the Three bucket strategy can help you protect your lifestyle, manage Taxes on interest income, avoid surprises with Medicare income and IRMAA income, and ultimately retire comfortably while maintaining flexibility and peace of mind.

In this episode, find out:

• Why having too much in your Cash bucket could hurt your long-term Retirement investing strategy
• How declining Money market rates and Interest rates 2026 impact your retirement savings
• The hidden impact of Taxes on interest income and how excess cash can increase Medicare income and IRMAA income
• How inflation erodes cash savings and affects Inflation savings over time
• How the Three bucket strategy supports a balanced plan for retirement and helps secure your retirement

Tweetable Quotes:

“Cash feels safe, but too much cash in the wrong environment can quietly cost you millions over a 30-year retirement.” – Radon Stancil

“Your financial plan should drive how much cash you hold — not today’s money market rate.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome, everyone, to secure your retirement podcast. Murs and I today are going to 

talk about a topic that we get asked about all the time. And ultimately, 

it comes down to this idea of how much cash should I have in the bank or in my 

money market, wherever it might be, but just cash, not invested anywhere. And I just 

to give a little bit of background on this, and then, Murs, I’d like to hear what 

you have to say about this as we get started on it. But, you know, this all kind 

of comes back to, I think, this idea of when we’re working, a lot of financial 

planners would tell people you need to have six months of income as far as in 

savings. And that made sense because if you think about it, if I’m working and I’ve 

got a job and I lose my job; the idea would be if I’ve got six months of cash 

in the bank, I could then go find another job and I have time there, 

like accessible money. And so, it made sense to think about it that way. But most 

of our clients are good savers. They’re way down the road of not just working for 

paychecks by paycheck. They’ve actually got savings in place and many of them are 

getting close to or if not already in retirement. So now that poses the question, 

how should people think about that then? And I will tell you it’s all over the 

place. I mean, we have some people who have a tremendous amount, want a tremendous 

amount of cash. And we have some people who are very happy not to have to have so 

much cash because they don’t like the earnings on it. So, let’s just get this 

conversation started and kind of talk a little bit about this idea, because we talk 

about having a cash bucket. We think you should have cash, but, you know, how do 

we think about this? Yeah, so I think to kind of think through the last few years 

that we’ve lived through. So, we sit here in 2026 

with interest rates continuously being a topic of conversation in the media. 

And, you know, 2021 coming out of the pandemic, that’s when the Fed started to 

raise rates. And then 22 and 23 and 24, rates got to a pretty high point, 

historically high point, that we haven’t seen in quite some time, to where you could 

park your cash in the bank in a money market and earn 5 % without doing anything. 

FDIC, it’s covered, it’s secure. And on top of that, it’s going to make 5%. A 

pretty attractive scenario, right we haven’t seen that in decades and then your CDs 

were also very attractive and they haven’t been attractive at all since you know for 

the longest time in your CDs if you know where to tie up money for six months 

to 12 months 18 months you could lock in an even better rate somewhere closer to 

five and a half to six percent at the at the peak of that interest rate cycle 

well, you know I think people have gotten comfortable with having cash in the 

bank. And the problem is the thing that we need to be thinking about is, well, how 

much cash is too much cash in the bank, especially as it begins to become 

ineffective, right? We’re starting to see rates drop down. I think one of the better 

money markets today to look at, you know, it’s probably paying three to three and a 

quarter percent at the time of this recording. And so, we’re going to continuously 

see the rates start to drop down. Your CDs aren’t any better than the money market 

rates in most cases. And so, you know, what are we supposed to do? And we want to 

have this balance of, well, there is an element of comfort to having accessibility 

and having cash in the bank. But, you know, a lot of people went a little bit 

heavy in cash in the banks because of how good the rates are. And so the 

conversation really becomes, well, what do we do now? Now that rates are declining, 

it’s not as effective or not as fruitful as it was a couple years ago. What do we 

do? So, you know, 

let’s just talk reading a little bit about the risk, I guess, that we could talk 

about overloading this cash bucket. You guys have heard us talk about buckets all 

the time and we’ll talk more about that too, but one of those buckets is cash. So 

let’s talk a little bit about the risk of having too much over there, Radon. Yeah, 

I think that, you know, I think there’s some good reasons to have a good cash 

bucket. A lot of times people might think about, well, I want enough cash that I 

can live on it for this year. And I don’t have to worry about the volatility. I 

don’t have to worry about what’s going on in the stock market. I’ll just use this 

money and let the markets do what the markets do, and there’s good about that. But 

here’s the problem. Cash creates a couple of issues. One, I might not be able to 

get as good a return, especially now with those rates that have come down. But 

worse than that, to me, is that sometimes people go, I’m going to put this money 

in a CD, I’m going to put this money in the bank. And we have had clients, you 

know, who’ve had sizable amounts of cash, and it generates a taxable income. Whether 

I need the money or not, whether I take the money or not, I’m going to have to 

pay taxes on the interest that’s earned as ordinary income tax. And the problem with 

that is, is now that reduces my amount of return that I got on it. 

And in addition to that, I can create other problems. I might affect my taxes when 

it comes to Irma, when it comes to my Medicare problems, if I’m just, if I’ve got 

a good amount of cash and it’s just earning money that I don’t need, that could be 

a really sensitive issue. I think the other thing is, is that I think when we look 

at the overall plan, many times we’ll show people, we’ll say, well, what if we 

earned 4 % over the next 30 years versus even four and a half or 5 %? It could 

make a million, two, three million dollars, depending on the size of the account, 

difference over a 30-year period. So really, we don’t want to have more cash in 

what we feel that we absolutely need in there. And so, I think that’s the biggest 

thing. I don’t know about you, Murs, if you’ve got anything else to say on that. 

Yeah, I think to add to that, you’ve got, you know, something also, while we’ve 

been living through this interest rate cycle of it going up, up, up, and then now 

steadily coming down. We’ve also gone through this inflationary cycle that’s been 

unique and kind of unheard of because of the things that were done during the 

pandemic and supply chains being interrupted and everything like those costs went 

tremendously up and you know depending on who you talk to inflation is still an 

issue that we’re dealing with here in 2026 and so if our cash is not growing at 

the rate of inflation our cash effectively is losing money in all essence you 

know it’s not buying what it used to buy it’s not keeping up with it’s not 

maintaining our buying power. So having too much in a bucket that’s underperforming 

is going to affect our ability to spend as we kind of think through what 

retirement’s going to look like for us. The other part of it is, and we’ve heard 

this story so many times, right? Go back to 2008. Go back to any market issue 

where investors have had enough and they just say, no, I can’t handle it. 

I’m going to get out. I’m going to get on the sidelines. I’m going to put my 

money in money markets and CDs and just at least I won’t have stress and I’ll get 

back in when it makes sense to get back in and the problem is that we never 

get back in and the opportunity costs of not getting reinvested into the markets I 

mean take the last five or six years from a market perspective let’s say you got 

out during the pandemic in 2020 he said the world has fallen apart I want to put 

my money in cash I wanted to be secure while 2020 ended up being a double-digit 

market year. 21, a double -digit market year. 22 had some issues where money was 

lost, but 23, 24, and 25 all double -digit market years. So, you know, you think 

about the opportunity costs of remaining in cash for whatever reason and not having 

that plan in place to redeploy, get back in. That, again, could speak to millions 

of dollars depending on the size of the count that we missed out on. So, I think 

those are two big ones that we don’t want to ignore. So, Radon, let’s talk a 

little bit then about the three buckets that we talk about, because it does address 

cash, but it also does address this idea of safety and still making money and a 

return in a safe manner that’s going to be better than what banks can provide. So 

let’s dive into those categories a little bit. Yeah, I mean, basically, we always 

are talking about three buckets. We’ve got a cash bucket. We’ve got an income safety 

bucket. We’ve got a growth bucket. So, we believe in having some cash in the bank. 

And I think that, you know, sometimes people say, well, how much cash should I 

have? And I say that comes a little bit down to your comfort level. But I think 

the real question of what people are asking is how much money should I have that’s 

not got market volatility to it? And that’s what we’re going to talk about here in 

these two buckets. So, we definitely believe you should have some cash in the bank. 

And really the way I look at it is short -term needs. So, if I look at things and 

think, hey, this year I’ve got a car I’m going to buy; I’ve got an addition I’m 

going to do on the house, or I’ve got a wedding I’m going to pay for. We’ve got 

a couple clients right now that are going through that and I’m taking care of these 

weddings. That’s going to up the amount of cash that we might need for the year. 

If I think I’ve got something big coming, yeah, let’s raise some cash, have it 

there in the bank, not invest it, not put it in anything that would limit my 

liquidity, so I can take care of those things. So many times, what we’re doing when 

we do our financial planning strategy meetings is we’re kind of looking at what’s 

the need for the year. And when we look at what the need is for the year, what 

kind of things that we have coming about, if it’s just normal income needs, not a 

big deal. We can take that from our income safety bucket. If it is a big ticket 

item, I might need to raise my cash level. So, I’m going to come back to the cash 

bucket is really kind of personal. Some clients want 50, 60 ,000. Some clients want 

200 ,000 and 300 ,000. Do I believe that we should have that much in cash? Not 

unless I got something really about to happen. You know, I’m about to go buy a 

house somewhere. I need, about to go do a buy -in over at a CCRC, a continuous 

care retirement community. Those are reasons to have higher amounts of cash outside 

of that kind of things, I want my money working for me but that takes us to 

bucket number two so immersed what bucket number two which is the income safety 

bucket let’s talk a little bit about that because I think that might settle the 

nerves when it comes around this idea of market volatility right the reason people 

keep so much in cash outside of a specific um purpose like buying a house or down 

payment on a house or car purchase is well the comfort that comes with it, the 

lack of stress that comes with having cash in the bank. 

Well, if there’s a way to do that and can maintain that comfort and still have the 

ability to earn a decent rate of return, well, I think most people would opt for 

that. And so, we call that the income and safety bucket. We call it the income side 

of it as well, we want the majority of our cash flow needs coming from this 

bucket. So, if I need $5 ,000 a month and I’m only receiving $3 ,000 from Social 

Security, I want the other two coming in from a place that’s not subject to 

volatility, not subject to downside risk, so that when we’re making out these long 

-term plans, we know where our cash flow is coming from for a certain period of 

time. Probably not where it’s coming from forever, but for a good chunk of time, we 

know exactly where we’re drawing the money from that solves a lot of issues when it 

comes to financial planning and long -term investment planning but that’s 

part one is that we it’s going to provide the income that we need that so security 

or pension is not going to cover all of right the safety part of it is as 

well, we want something that’s going to still give us that comfort and that 

reliability and that predictability something that is not associated with the stock 

market in the sense of the ups and downs of the stock market, something that can 

give us a bond -like or better rate of return without even the risk of the bond 

market. I say that because in 2022 and 2021, the bond markets had tremendous issues. 

They lost the, you know, the aggregate bond index is kind of like the S &P 500 of 

the bond world, lost almost as much as the general stock market did, and that blew 

people’s minds, right? I’m in bonds for safety, and all of a sudden, my bonds lost 

10 % in a year, right? So, if there’s a place where we can get principal protection 

and a bond -like return or better, I would put that in the category of, say, 4 to 

8 % over a 10 -year period, you know, that is a place now where we can have decent 

growth, but also the reliability of our withdrawal strategy coming into play. And 

what allows for it now is that, well, we can, if we’ve got, I mean, just picture 

that for a second, if we’ve got our cash flow needs figured out for, say, the next 

five, 10, 15 years, well, we’ve got a ton of opportunity now on the other side, 

which is where true growth happens, and it just so happens, we call that the growth 

bucket. Let’s talk a little bit about the growth bucket now how those two interact 

together. Yeah, the idea behind the growth bucket is we are trying to go for bigger 

long -term rates of return. We are taking some risk on in that bucket. 

And so, we’re going to have some potential volatility in that bucket. That bucket 

over a period of years, let’s call it 10 years, five to 10 years, should perform 

really, really well. And so, we do have things in there like stocks. We have 

exchange traded funds. We have some alternative investments that we’ll invest in, 

things that like private investments, we’ll have those types of things that we’re 

going to invest in. But if I’ve got my cash bucket and my income safety bucket and 

the markets go through a little bit of volatility and all my income that I need is 

coming in for my fund, for my, you know, essential needs, I don’t have to worry so 

much when that growth bucket’s going through a little bit of a cycle, which the 

markets go through. There’s nothing we can do to stop it. There’s going to be 

periods where the markets are just ripping and roaring, and there’s going to be 

periods where the market’s going to have volatility in it. And sometimes that’s very 

short term. Sometimes that’s a little bit longer term. But if I’ve got my income 

needs taken care of for the next few years, I can live through pretty heavy market 

cycles, and I’m not stressed. I’m not stressed about it because I know that I’m 

going to allow that bucket to come back. I’m not going to have that bucket be down 

what I need to get access to the to the cash. So, when you think about that three 

bucket strategy, my cash, my income safety and my growth bucket, and I marry those 

together, I have a really good sound plan. And that’s why we say it’s going to 

provide a piece of mind. I’m going to have peace of mind because I’m not worried 

about any layer of what I’m going to need for retirement. But I think we’ve covered 

this pretty good, Murs, to wrap this up a little bit. I mean, you know, any 

closing remarks just kind of talking a little bit of maybe about how this reduces 

stress or helps us deal with the stress? Yeah, I think, you know, bottom line, 

going back to the title of our podcast today, how much cash is too much cash. 

Well, I think it’s a very objective question, and there is no definite answer that’s 

going to solve for all families. I think every family is going to have a different 

answer based off of their goals, based off of what their year is going to look 

like. But bottom line is we want to get away from this place of keeping too much 

cash in a place that’s not operating as good as it was a couple years ago. But 

the only way you do that is you find strategies and plans, and this is where we 

talk about financial planning and how the financial plan really drives the ability to 

make good decisions when it comes to our withdrawals, when it comes to taxation, tax 

strategies. Also, our investment philosophy is very much tied to our financial plan. 

So, everything, you know, and how we operate revolves around that. I tell people all 

the time when they come on as a new client, the first thing they’re going to do 

is have their personalized planning meeting where we build out their retirement 

-focused financial plan that says, hey, here’s where you are right now. And here’s 

all the things that we need to think about, like how we want to live, how we’re 

going to spend, Medicare, Social Security, you know, the withdrawal structure and 

everything in between and, and, you know, how all of this plays out in over a 30, 

40-year timeline. Once you see that, then you start to understand, well, yeah, this 

could really work. I could retire and I could have a very nice retirement if I 

have all the pieces in place. And a big part of that is having an investment 

strategy that you’re comfortable with, that aligns with the amount of risk that you 

want to take, and that is optimized for withdrawing when it’s time to withdraw, but 

also, for long -term growth because we need that as well. So that’s really, I think, 

the purpose of the episode of day is just to shine some light on while cash isn’t 

as effective as it was a couple years ago, if you’ve got a lot of money in cash 

and you don’t really have a good reason; it may be worth a conversation at this 

point. So, if you have questions or anything like that, you know, we’re always happy 

to have a conversation 

website at POMwealth.net.