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 (
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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.
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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.
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 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 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.
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!
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
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 (<200K) money market account at an on-line bank that gives an OK interest rate for your emergency funds. You can write checks on a money market account and it is easy to make 2 business day transfers to your linked local account although you may be limited to making only small (<$50K per day) transfers.
3) Cash that you don't need on such short notice can be kept in treasuries via a Treasury Direct account linked to your local checking account. It is easy to set up your account so that you have treasuries maturing weekly, every two weeks or at what ever frequency you want. That will generate periodic cash flow to your checking account. This is the safest place to keep your money and there is no limit to how much you can invest in treasuries. Currently, treasury bills are giving decent yields, but when interest rates peak I will switch over to laddered notes. You only need six notes to generate monthly income.
4) You can always maintain a brokerage account. I prefer to use mine for investments only.
Personally, with the exception of my treasury direct account I prefer to keep my money spread out. I have had money at a bank that failed and even with full FDIC coverage, it can take a while to get access to your money after a bank failure.
I second the idea of only using a debit card for cash withdrawals at your local bank's cash machine. I never use my debit card for anything else. It is also a very good idea to keep at least two active credit cards just in case one card gets compromised. This is essential if you ever shop on line with your card. If you do shop on line, I suggest using a dedicated card for that that is not used for other purchases.
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.
Great info, Rob!
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.
Great video. I have a similar setup with one of the major financial entities that you recommended
Thanks for sharing awesome tips! I'm financially free and currently growing a solid retirement plan. It takes a positive and consistency to learn new things, unlearn the old habits is important to get a mentor/coach to lead you all the way.
I would not put money into bonds right now. When interest rates go up bonds go down.
Thanx Rob.
Very good practical information for those of us close to retirement.
Very comprehensive video.
I'm not in retirement, but for me, Fidelity checks all of the boxes. I only buy index ETFs so the brokerage works for me. Checking account is interest bearing. Credit card points auto redeem to the money market fund inside taxable Investment account.
For savings, I use Lending Club's high yield savings currently earning 3.20%.
No.gonit.you.mistocar.
Yeah explain how FDIC covers $1.2 million deposit of cash when the rules state $250K per account per bank customer(s).
your gold framed picture behind you is very crooked!
I began retirement planning the first day out of college. I worked to live, travel and to retire.
Rob. Appreciate your videos. Can you do a short section on how card points translate to $ for one of the cards you recommend?