Jeremy Keil explains how putting your cash in the wrong spot could prevent you from earning thousands in interest during your retirement.

Many retirees spend a lot of time thinking about how to get better returns on their investments.

But very few spend time thinking about the return on their cash.

That’s a problem.

Because for many retirees, cash isn’t a small side account. It can be a meaningful portion of their overall financial picture—and if it’s sitting in the wrong place, it may be quietly costing thousands of dollars each year.

The average new retiree may have around $100,000 sitting in bank accounts, often earning around 0.4%, while higher-yield options closer to 3%+ are available.

That difference can mean roughly $3,000 per year in missed interest.

And it happens more often than you might think.

Why Cash Gets Ignored

There are a few common reasons retirees leave cash sitting in low-interest accounts.

First, it’s easy.

Many people have used the same bank for years. There’s a sense of familiarity and convenience. Moving money feels like work.

Second, there’s a perception of safety.

Cash in a local bank feels secure. And while safety is important, many retirees don’t realize that other options—like high-yield savings accounts—can offer similar protections when properly insured.

Third, there’s inertia.

Cash tends to become an afterthought. Investors focus on stocks, bonds, and market performance, while cash quietly sits in the background.

But ignoring cash doesn’t make it harmless.

In some cases, doing nothing is actually the riskier move.

What Retirees Actually Want from Cash

When I ask retirees what they want from their cash, the answers are surprisingly consistent.

They want it to be:

Available
Safe
Easy

Those are reasonable goals.

But what if you can achieve all three and earn more interest at the same time?

The idea that higher interest automatically means higher risk isn’t always true—especially when comparing FDIC-insured accounts or certain money market options.

Rethinking “Just in Case”

One of the most common reasons people hold large amounts of cash is “just in case.”

That makes sense.

But it’s worth examining how often that “just in case” actually happens.

According to the Center for Retirement Research at Boston College, about 10% of annual expenses tend to be unexpected—things like medical costs, home repairs, or other surprises.

That’s exactly why cash matters.

But it also raises a question:

If you’re holding significantly more than what you typically need for unexpected expenses, could some of that money be working harder for you in the meantime?

Cash doesn’t have to sit idle to be available.

The Real Risk of Doing Nothing

There’s a common belief that staying put is the conservative choice.

But that’s not always true.

I once met with an investor who described herself as conservative, but in reality, she was heavily exposed to stock market risk without realizing it.

She didn’t want to make a change to her investment strategy because she’d been doing it the same way for so long, the change felt risky.

When her investments tanked by 90% later on, the desire to “conservatively” keep things the same ended up being the very reason why her losses were so dramatic.

The lesson applies to cash as well.

Sometimes, not making a change feels safe—but it can lead to outcomes that are far from conservative.

If your cash is earning near-zero returns while inflation is around 3%, you’re effectively losing purchasing power each year.

That’s a quiet risk, but a real one.

Simple Ways to Improve Your Cash Strategy

Improving your cash return doesn’t require a complex overhaul.

There are a few straightforward places to start:

High-yield savings accounts
Often available online, these can offer significantly higher interest rates than traditional banks. Sources to find these accounts include Bankrate.com and DepositAccounts.com.
MaxMyInterest.com
I recently was joined by Gary Zimmerman, president of MaxMyInterest, on the “Retire Today” podcast–make sure you listen to that episode to learn more about how this system works as a cash growth strategy.
Money market funds in brokerage accounts
Many brokerage accounts offer options that pay higher interest—but the default cash setting may not.

Cash Is a Tool, Not an Afterthought

Cash plays an important role in retirement.

It provides stability. It covers short-term needs. It gives you confidence that money will be there when you need it.

But cash should be treated as a tool, not an afterthought.

Used well, it supports your income plan and helps you stay flexible.

Ignored, it can quietly drag down your overall financial picture.

If you haven’t reviewed where your cash is sitting lately, now might be a good time.

Because sometimes the easiest improvement in your retirement plan isn’t found in the stock market.

It’s sitting in your savings account.

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About the Author:

Jeremy Keil, CFP^®, CFA is a retirement financial advisor with Keil Financial Partners, author of Retire Today: Create Your Retirement Income Plan in 5 Simple Steps, and host of the Retirement Today blog and podcast, as well as the Mr. Retirement YouTube channel.

Jeremy is a contributor to Kiplinger and is frequently cited in publications like the Wall Street Journal and New York Times.

Additional Links:

Buy Jeremy’s book – Retire Today: Create Your Retirement Master Plan in 5 Simple Steps
“How Much Are Emergency Expenses for Retirees and Are They Prepared?” – Center for Retirement Research at Boston College
“Here’s How to Earn a Fistful of Interest on Your Cash in 2026” – Jeremy Keil, Kiplinger.com
“Growing Your Cash as a Retirement Asset with Gary Zimmerman” – Retire Today Podcast on the Mr. Retirement YouTube channel
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