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One critical consideration is reducing liabilities. Often, individuals holding cash might also have varying degrees of debt. Instead of keeping cash that yields minimal interest, it could be more beneficial to use that cash to pay down debt with higher interest rates, such as student loans or credit card bills. By eliminating these obligations, you can lower your monthly expenses and redirect those savings into a high-yield interest account.
Timing Social Security Benefits
Lastly, retirees should consider deferring Social Security benefits as long as possible. Delaying benefits can increase the payout by 7-8% for each year postponed, offering a robust financial incentive to utilize cash reserves in the interim.