Retirement is a chapter many look forward to, but with freedom comes new financial responsibilities—and sometimes, uncertainty. Suze Orman, a trusted voice in personal finance, strongly advises retirees to keep a substantial amount of their savings in cash. Why? Because life doesn’t stop throwing surprises just because you’ve stopped working. Think you’re prepared? Suze’s cash strategy might change your mind.
Covering Emergency Expenses
Emergencies are bound to happen, and post-retirement, surprises like medical bills or urgent home repairs can be even more stressful. Since Medicare doesn’t cover everything, out-of-pocket costs can be steep. That’s why Suze recommends keeping 8–12 months of expenses in cash to stay prepared and stress-free.
Protecting Against Inflation
Rising prices can erode fixed retirement incomes, ultimately making everything from groceries to utilities more expensive. With inflation reaching 40-year highs recently, retirees especially feel the pinch. Having accessible cash lets you adjust your budget as costs rise, reducing the pressure to tap into long-term investments early.
Maintaining Lifestyle Flexibility
Retirement is meant to be enjoyed! Readily available funds make it possible to travel or say yes to fun opportunities without anxious budgeting. Fixed incomes can restrict spontaneity. But savings dedicated as “fun money” can allow three times as much travel and adventure for retirees compared to those without a buffer.
Avoiding Early Withdrawal Penalties
If you access your 401(k) or IRA before age 59½, you could face an early withdrawal penalty, on top of income taxes. Cash on hand provides a buffer to cover expenses without tapping retirement accounts early. Suze calls this “penalty protection,” which proves helpful for those retiring sooner than expected.
Supporting Family Members
Do you help your adult children or grandchildren financially during retirement? It’s a kind gesture, but without planning, it can harm your stability. Orman urges setting clear financial boundaries to protect yourself. Many retired people regularly support their families and risk straining their own resources.
Avoiding Debt In Retirement
When you’re on a fixed income, debt can be particularly dangerous. In fact, a lot of retirees still carry credit card balances or loans that ultimately lead to stress. That’s why Suze warns that debt erodes peace of mind. Fortunately, accessible savings help you avoid borrowing and maintain financial stability.
Taking Advantage Of Opportunities
Opportunities don’t always wait for the next market uptick or maturing bond. Whether it’s buying a new downsized home or starting a small venture, ready cash lets you act fast—no waiting on credit approvals or slow-moving sales of investments. Interestingly, many retirees began second careers or side hustles in 2024.
Managing Delayed Social Security
Thinking about delaying Social Security for higher benefits? Covering expenses during that wait can be challenging. That is why Suze Orman advises saving enough cash to bridge the gap, ultimately allowing you to delay benefits confidently and avoid financial strain in the meantime.
Preserving Peace Of Mind
Ultimately, knowing your bills and emergencies are covered by reliable savings creates lasting peace of mind. Orman consistently links emotional security with financial preparedness, and a lot of retirees say cash reserves make them feel safer. Lack of liquid funds is one of the biggest sources of regret for retirees.
Avoiding Selling Assets During Downturns
Finally, one of the wisest points Orman makes is that cash allows retirees to stay calm during investing downturns. There’s no need for panic selling, which can permanently reduce your nest egg and slow your portfolio’s recovery. Instead, you can stick to your plan, let investments rebound, and safeguard your long-term goals.
