I just hold almost zero cash (<0.5% of portfolio).Is it reasonable or optimal for higher tax bracket retirees to locate most of cash allocation in tax deferred account, and any unrecognized risks or inconveniences by doing so?
Contemplating tax deferred account holding entire allocation of fixed (bonds), and all remaining cash (after cash emergency fund = one year of essential expenses placed in taxable account), with residual space filled by equities. All other accounts would hold only equities except for cash emergency fund as above. Plan would be to sell taxable account equities as necessary for any expenses not funded by income, social security, and required minimum distributions. Would rebalance tax deferred account holdings as needed to maintain overall allocation across all accounts: equity 60-70%, fixed (bond) 25-35%, cash 5%. Taxable account assets may be adequate without elective withdrawals from tax deferred and tax exempt accounts, which would pass to beneficiaries.
May not make much of a difference during periods of lower cash interest rates as in recent past, but might this be worthwhile to limit tax costs during periods of higher cash interest rates similar to present?
Statistics: Posted by steadyosmosis — Thu Jul 04, 2024 9:12 am — Replies 1 — Views 269