How will you pay for expenses in retirement, or on a short-term break from work? If, or when, your paycheck stops, how will you cover travel, medical, and tuition bills, or large lump sums such as property taxes?
Here’s how we manage cash reserves and provide income for our clients taking extra time between jobs or in retirement.
First, we establish three distinct asset buckets. On an ongoing basis, we transfer assets between the buckets after thoughtfully strategizing short- and long-term needs.
- Checking Account
- Cash Flow Reserve Account
- Investment Portfolio
A cash reserve provides peace of mind and flexibility and is an important part of a long-term investment strategy. Cash in your checking and cash flow reserve accounts makes up your cash reserve. This cash serves as a buffer for unexpected emergencies so that a surprise expense doesn’t require a portfolio withdrawal.
Checking Account
We recommend our clients keep three-to-six months of living expenses in cash at all times. Holding cash reserves in an account that’s fully liquid—meaning you can make withdrawals at any time—preserves your principal. FDIC insurance covers a variety of accounts at eligible banks.
How It’s Funded: Your checking account is funded with your high-yield money market fund. Hold 1 to 6 months of cash in your checking account.
Cash Flow Reserve Account
A subset of your cash reserve, we hold position-traded money market funds here. The yield on these funds is generally higher than in a checking or savings account; yields change based on interest rates. In early 2026, rates are in the 3-4% range.
Mutual fund companies such as Fidelity, Vanguard, and Schwab, offer high-yield money market funds, although they are not generally FDIC insured.
How It’s Funded: Your cash flow reserve account is funded with strategic, low capital gain (when possible) sales from your investment portfolio. Our rule of thumb is to hold 6 to 24 months of cash needs in this account.
Investment Portfolio
To stay ahead of inflation and have the highest probability of achieving your long-term goals, a diversified portfolio is crucial. It spreads your assets across different securities, sectors, and countries. We help you identify the right mix of investments that aligns with your risk tolerance.
With a holistic view of your goals, we can help you stay invested in your chosen portfolio, while providing cash flow for ongoing needs.
Next Steps
If you are approaching retirement or planning a transition away from a steady paycheck, it may be helpful to evaluate whether your current financial structure supports both short-term spending and long-term growth. If you’re not working with an advisor, contact us to get started.
Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
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