Silicon Valley Bank has gone under with Signature Bank following close behind. This has a lot of people worried about their cash.

Today we will briefly discuss what’s going on and what to do with your cash and investments, and a free tool to check if you are fully covered by FDIC insurance.

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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you.
Disclosures:

0:00 Overview
0:43 What happened?
2:19 The Fed saves depositors
2:34 What retirees can do with their cash…(read more)

LEARN MORE ABOUT: Bank Failures

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Bank Failures – What Retirees Should Know + What Now?

Bank failures can be a frightening reality for retirees who rely on their savings for a secure financial future. The collapse of a bank can have severe consequences, leaving retirees wondering what their next steps should be. This article aims to shed light on what retirees should know about bank failures and provide guidance on what to do in such a situation.

What is a bank failure?
A bank failure occurs when a financial institution is unable to meet its financial obligations and is declared insolvent. It can be caused by various factors, including mismanagement, risky lending practices, or an economic downturn. When a bank fails, it typically results in the loss of depositor funds and may lead to a domino effect throughout the economy.

FDIC insurance and its protection for retirees:
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that provides insurance coverage for deposit accounts held in banks. This insurance program protects individual account holders up to $250,000 per depositor, per insured bank. Retirees should ensure that their accounts are opened with FDIC-insured banks and that their deposits do not exceed the coverage limit.

Steps for retirees in case of bank failure:

1. Stay informed: Keep an eye on the financial health of the bank where your accounts are held. Regularly monitor news and any warning signs that may indicate potential trouble. It’s crucial to stay informed and be proactive to protect your savings.

2. Contact FDIC: If a bank fails, the FDIC usually steps in to protect depositors’ interests. Contact the FDIC for information regarding the status of your accounts, potential payout, and what steps you need to take.

3. Assess your accounts: Review your account balances to determine if they exceed the FDIC insurance limit. If they do, consider spreading your funds across multiple FDIC-insured banks to ensure greater protection. Be cautious of hastily moving all your funds to a single bank, as concentration can lead to higher risk.

4. Evaluate alternative options: In the event of a bank failure, explore alternative financial institutions or investment options to safeguard your retirement savings. Consider credit unions, which might provide similar services while being backed by the National Credit Union Administration (NCUA), which functions similarly to the FDIC.

5. Seek professional advice: It is wise to consult with a trusted financial advisor who specializes in retirement planning. They can help you navigate the complex aftermath of a bank failure and guide you towards the best course of action based on your individual circumstances.

Preventive measures for retirees:
To mitigate the impact of a potential bank failure, retirees should adopt some preventive measures:

1. Diversify your holdings: Avoid putting all your eggs in one basket. Diversify your savings across different banks, investment vehicles, and asset classes to reduce your exposure to any single institution.

2. Regularly review your accounts: Periodically evaluate the financial health of your banking institutions. If you notice any red flags or concerns, consult with your financial advisor on potentially moving your funds to more stable institutions.

Conclusion:
While bank failures can be distressing for retirees, understanding the available protections and taking appropriate actions can help mitigate the impact. Staying informed, diversifying holdings, regularly reviewing accounts, and seeking professional advice are key steps that retirees should take to protect their retirement savings. Remember, knowledge and proactive planning are essential in navigating the uncertain waters of the financial landscape.