Are You a Baby Boomer With Too Much Cash? Three Scenarios for What to Do
Investing in the market while the market is high might not seem like a good idea right now, but here are three scenarios to help you decide what to do.


In his forthcoming book, The Soul of Wealth, Dr. Daniel Crosby tells the story of how dominant Xerox was in the tech space. When Apple and Microsoft came along to create personal computers, Xerox chose not to invest in R&D. By the time its PC, the Xerox Star, hit the market, it was too late. The point of the story is that the timing in business and in markets will never be perfect. In fact, our perfectionism is to blame for keeping cash on the sidelines.
If we looked at markets in 2020, a global pandemic was certainly good reason to stay out. In 2021, supply-chain problems caused a spike in material costs and made it nearly impossible to get a car and many consumer electronics. Russia invaded Ukraine in 2022. About 70% of economists predicted a recession in 2023. And yet, in three of those four years, the U.S. stock market gained ground, which is in line with historical averages. You will never find a perfect year to put that cash to work. You also shouldn’t blindly invest it.
Below are three scenarios for you to come up with a plan for your cash.
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Scenario #1: If you don’t need the money for 10-plus years…
This money should be invested with an asset allocation that you’re comfortable with. I don’t believe you need to get in over a period of time either (dollar cost average). According to data from Ibbotson and J.P.Morgan, there has never been a 10-year period since 1950 with a negative return in a 50% stock/50% fixed income portfolio. If you want to get a sense of the risk you’re comfortable with, you can use our risk tolerance software.
Scenario #2: If you need the money in two to 10 years…
I still believe this money should be invested, but you should invest over a period of time. I typically recommend three to six months of dollar-cost-averaging into the market.
Example: You have $500,000 sitting in cash that you may need within two to 10 years. You invest $100,000 per month in an appropriate asset allocation.
This will mitigate the risk of buying at a high. I had clients who sold a home late in 2021. They will buy another home in 2025. Their numbers were similar to the above example. We dollar-cost-averaged in, in 2022, and therefore bought as the market was dropping. They are now well positioned for their purchase next year.
Scenario #3: If you need the money in less than two years…
Cash or cash equivalents. Even aggressive asset allocations typically don’t take two years to recover from bear markets. However, the Great Depression, dot-com bubble and the Global Financial Crisis are notable exceptions, so it’s better to be conservative. For money you need in less than two years, I would not advise having market exposure, especially in today’s high-rate environment. There are several options yielding 4% to 5% with principal protection.
There is a fourth option here: You don’t need the money or the return. In other words, you have way more than you need, and the return tradeoff is worth the sound sleep. You can check whether you are in this situation by building out a financial plan here.
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- The Five Stages of Retirement (and How to Skip Three of Them)
- Five Things I Wish I’d Known Before I Retired
- Why Turning 65 Isn't What It Used to Be, According to an Expert
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After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
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