Cash balances kept climbing in 2026. Money market funds hold nearly $8 trillion, including more than $3 trillion from individual investors.1 Total household cash and cash equivalents have reached an estimated $20 trillion, a record high.2
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It’s easy to see why. Yields near 4% have made cash feel rewarding, while offering something clients value: stability.
But stability alone doesn’t guarantee long-term financial security.
Cash is the right place for money a client may need soon: everyday expenses, emergency reserves, and planned purchases. The problem starts when clients hold more cash than those needs require, and the excess sits there indefinitely.
3 hidden costs of holding too much cash
Shift the question: Liquidity or protection?
The answer is not to tell clients they are holding too much cash or to dismiss their preference for safety.
Instead, behavioral finance can help financial professionals work with those preferences.
Start by identifying what each portion of the client’s cash is intended to do.
Some money may need to remain immediately accessible for emergencies or near-term expenses. Other dollars may not need liquidity at all. The client may simply want them protected.
That distinction is important.
Rather than asking, “Should this money stay in cash?” consider asking:
- How much needs to be available right away?
- What is the rest meant to accomplish?
- How long will it sit untouched?
- What matters most: liquidity, protection, growth, or future income?
- What happens to the plan if cash yields drop?
When to consider alternatives to cash
For dollars earmarked for longer-term goals that don’t require immediate liquidity, fixed indexed annuities may be among the options worth considering.
Depending on the product, annuities can provide:
Less tax drag
Interest grows tax-deferred until withdrawal.
Rate certainty
Certain fixed and fixed-index annuities may let clients lock in current rates for longer periods.
Principal protection with growth potential
FIAs protect against direct market losses while crediting interest linked in part to an external index.
Lifetime income
Some annuities offer guaranteed income for life.*
A fixed indexed annuity may be especially relevant for clients whose preference for cash is driven by a desire to protect principal, but who don’t need immediate access to all of those dollars.
The goal isn’t to eliminate cash. It’s to make sure the amount a client holds aligns with what they want to accomplish.
Consider whether there may be another way to provide the protection they value while helping address some of the hidden costs of holding too much cash.
Explore Guaranty Income Life’s fixed indexed annuity options designed to help protect clients’ money while supporting their long-term financial goals.
*Guarantees are backed by the financial strength and claims-paying ability of the issuing company.
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