Ever feel “asset-rich but cash-poor”?
That was the shock a retired couple shared with me recently. They spent years building a portfolio of real estate, relying on rental income to fund their lifestyle. But when unexpected expenses hit—helping family, covering medical bills—they found themselves in trouble. Their wealth was tied up in properties, leaving little cash for immediate needs. Selling wasn’t a realistic option, and taking on debt felt risky at their stage of life. They were caught in the liquidity trap—plenty of assets but no easy way to turn them into cash.
Why Cash is Important
Retirees often underestimate the importance of liquidity. Holding cash or investments that are easy to sell offers flexibility to manage emergencies and opportunities. Without accessible cash, even the most comfortable retirements can become stressful. This couple quickly learned that wealth locked away in real estate limits their ability to react to life’s curveballs.
Easy Fixes Weren’t an Option
Selling property seemed like an obvious solution—until they discovered their minority stake in joint ventures left them powerless to liquidate. Optimizing rental income by switching from long-term tenants to an Airbnb model was also challenging since the effort required to manage short-term rentals didn’t align with their retirement goals. What looked good on paper was hard to execute.
This led the couple to rethink their approach. They began cutting unnecessary expenses and explored downsizing their primary residence to free up cash. While these decisions weren’t easy, they provided the liquidity they needed to regain control of their finances.
Strike the Right Balance
The key takeaway? Flexibility is essential. Retirees should aim for a financial plan that balances income generation with liquid assets. Having all your wealth tied up in hard-to-sell assets may yield solid returns, but it can leave you vulnerable when the unexpected happens.
Set yourself up for financial freedom by maintaining access to cash alongside investments. This may mean diversifying beyond real estate, building an emergency fund, or reevaluating your spending habits periodically.
For personalized advice on staying financially flexible, schedule a free Cross-Border Financial Evaluation at profile-financial.com/call. Let’s explore if we can help you unlock your wealth and keep your retirement plans on track—no matter what life throws your way.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published February 11, 2025.