Long-Term Disability vs. Long-Term Care: Do You Need Both?

Your financial plan isn't just about building wealth. It's also about protecting what you've worked so hard to build.

Open enrollment season is an excellent opportunity to revisit your financial safety nets. While most employees focus on health insurance premiums, deductibles, and retirement contributions, two important areas of protection are frequently overlooked: long-term disability insurance and long-term care insurance.

Although they sound similar, these types of coverage protect against very different financial risks. Understanding the distinction could make a meaningful difference in your long-term financial security.

The Financial Risks We Don't Like to Think About

Nobody particularly enjoys planning for illness, disability, or the possibility of needing assistance with everyday activities. Yet the statistics suggest these risks deserve attention.

• Approximately 70% of people reaching age 65 will need some form of long-term care services or support during their remaining lifetime, according to estimates from the U.S. Department of Health and Human Services.

• Roughly 1 in 4 workers will experience a disability before reaching retirement age, according to estimates commonly cited by the Social Security Administration.

These statistics don't mean everyone needs to purchase insurance. They do, however, illustrate why protecting your ability to earn income and preserve accumulated assets should be part of a comprehensive financial strategy.

The good news? Evaluating these risks doesn't have to be complicated.

Long-Term Disability Insurance: Protecting Your Income

For working professionals, one of your most valuable financial assets may be your ability to earn income.

Long-term disability insurance is designed to replace a portion of your earnings if an illness or injury prevents you from working for an extended period.

Many employer-sponsored plans replace approximately 50%–60% of covered income, subject to policy limits. However, the details matter considerably.

Important questions to ask during open enrollment:

• What percentage of my income would be replaced?

• Is there a maximum monthly benefit?

• How long must I be unable to work before benefits begin?

• Does the policy cover an inability to perform my specific occupation or any occupation?

• Would benefits be taxable based on how premiums are paid?

For high-income professionals, the maximum monthly benefit deserves particular attention. A policy advertising 60% income replacement may provide significantly less protection if benefits are capped well below your actual earnings.

And remember, disability coverage isn't just for households with children or dependents. If your lifestyle, savings goals, or retirement strategy depend on your paycheck, protecting that income matters.

Long-Term Care Insurance: Protecting Your Accumulated Wealth

While disability insurance helps replace lost earnings, long-term care insurance addresses a different concern: the cost of receiving assistance when you can no longer independently manage certain daily activities.

Traditional long-term care insurance generally provides benefits when an individual is unable to perform at least two of the six Activities of Daily Living (ADLs), or meets qualifying cognitive impairment criteria, subject to policy requirements.

These six activities include:

1. Bathing

2. Dressing

3. Eating

4. Toileting

5. Transferring (moving between positions, such as getting in and out of bed)

6. Continence

Long-term care may be provided at home, in an assisted living community, or in a nursing facility, depending on the individual's needs and policy coverage.

Unlike traditional health insurance or Medicare, which generally provide limited coverage for ongoing custodial care, long-term care insurance is specifically designed to help offset qualifying care expenses.

How Much Could Long-Term Care Actually Cost?

Costs vary significantly depending on your geographic location, the type of care required, and the duration of services.

A useful starting point is CareScout's Cost of Care resources, which allow you to explore estimated care expenses in different locations.

For individuals planning to retire in higher-cost metropolitan areas, these expenses can represent a substantial financial risk.

And for those who have spent decades building investment portfolios, an extended period of care could require significant withdrawals at an otherwise unexpected time.

Do You Actually Need Both Types of Insurance?

Not necessarily.

The appropriate level of coverage depends on your age, financial resources, employment benefits, household circumstances, and broader financial goals.

Long-term disability insurance is often especially relevant during your working years, when your financial plan depends heavily on continued earnings.

Long-term care insurance becomes increasingly relevant when evaluating how potential future care expenses could affect retirement assets, estate plans, and family members.

For some households, sufficient savings and investment assets may make self-insuring a reasonable option. Others may benefit from traditional insurance, hybrid life insurance policies with long-term care benefits, or a combination of strategies.

The objective isn't to purchase every available insurance product. It's to understand your financial exposure and make an intentional decision about which risks to retain and which to transfer.

Your Open Enrollment Benefits Review Checklist

Before finalizing your elections, consider taking a few minutes to answer these questions:

• Income protection: Would my existing disability coverage adequately support my financial obligations if I couldn't work?

• Coverage gaps: Are there limitations, exclusions, or benefit caps I haven't considered?

• Portability: What happens to my coverage if I change employers or become self-employed?

• Long-term care: How would I fund an extended period of personal care later in life?

• Financial coordination: Do my insurance benefits complement my emergency reserves, investment strategy, and retirement plan?

Your employer's benefits package is an important part of your overall compensation. Reviewing it with the same care you give your investments can help prevent costly gaps in your financial plan.

Before You Finalize Your Benefits, Let's Review Them Together

At Elswick Investments, we believe comprehensive wealth management means more than selecting investments and planning for retirement. It also means protecting the financial progress you've already made.

Before completing your open enrollment elections, consider scheduling a benefits review.

We can help evaluate your employer-sponsored coverage, identify potential gaps, and explore individually brokered insurance alternatives where appropriate. Whether you're a high-earning professional, navigating a career transition, or preparing for retirement, your coverage should support your broader financial strategy.

Because building wealth is important. Protecting your ability to keep it matters just as much.

Wealth strategies for your definition of success.

Insurance coverage, eligibility, exclusions, benefit triggers, and tax treatment vary by policy and individual circumstances. This article is intended for general educational purposes and should not be interpreted as a recommendation to purchase a specific insurance product.

One of the Most Overlooked Tax Strategies May Be Hiding in Your 401(k)

Interest rates and inflation have dominated financial conversations lately. Higher borrowing costs affect everything from mortgages to business financing, while elevated everyday expenses continue to put pressure on household budgets.

But there's another expense worth paying attention to—particularly for high earners:

Taxes.

Tax planning isn't simply something to think about when filing a return. The decisions you make throughout your career can determine how much of the wealth you're accumulating ultimately remains available to you. And one commonly overlooked opportunity may already be sitting inside your employer's retirement plan.

Are You Using the Roth Option in Your 401(k)?

For decades, workplace retirement savings largely meant making pre-tax contributions. Money went into a 401(k) before income taxes, potentially reducing taxable income today, and withdrawals would generally be taxed later in retirement.

Then came the Roth 401(k).

Although Roth IRAs have existed since the late 1990s, employers weren't permitted to offer designated Roth contributions within 401(k) and 403(b) plans until 2006.

That relatively recent history helps explain why some investors are familiar with the idea of a Roth IRA but have never seriously considered the Roth option available through their employer.

And for younger high earners, that distinction can matter.

A Roth IRA and Roth 401(k) Aren't the Same Opportunity

One of the biggest differences is simply how much you may be able to contribute.

For 2026, the IRA contribution limit is $7,500 for those under age 50. Meanwhile, the employee contribution limit for a 401(k) is $24,500.

Importantly, that $24,500 401(k) employee-deferral limit is shared between traditional and Roth contributions—you don't receive separate $24,500 limits for each.

Still, access to a Roth 401(k) can provide substantially more room for Roth savings than an IRA alone.

With a traditional 401(k), eligible contributions generally reduce taxable income today, while distributions are generally taxable later. Roth contributions work differently: you pay income taxes on the money today, but qualified distributions can generally be received tax-free later.

For someone who has decades of potential investment growth ahead, the difference in after-tax purchasing power can become significant.

But Should Every High Earner Choose Roth?

Not necessarily.

This is where tax planning becomes more nuanced than simply saying “Roth is better.”

Someone currently paying a relatively high marginal tax rate may benefit substantially from making pre-tax contributions today. Someone expecting considerably higher income later—or someone building a portfolio with very little tax diversification—may have a stronger argument for directing some retirement savings toward Roth.

And the answer doesn't necessarily have to be all or nothing.

Depending on the employer's plan, an investor may be able to divide contributions between traditional and Roth sources. That can create tax diversification: pools of retirement assets that will receive different tax treatment in the future.

The goal is to think about taxes across your financial lifetime—not simply minimize this year's tax bill.

High Income Doesn't Automatically Equal Tax Efficiency

This is particularly important for younger professionals whose incomes have increased quickly.

You may have started your career diligently contributing enough to receive the employer match. Then came promotions, bonuses, equity compensation and larger retirement contributions.

But did anyone ever revisit which type of contribution you're making?

It's surprisingly easy to increase a 401(k) contribution percentage year after year without reconsidering whether those dollars should be traditional, Roth or some combination of the two.

That's why benefits enrollment season can be a useful trigger for a broader financial review.

Before You Finish Your Benefits Elections, Check Your 401(k)

As you review your employer benefits, take a few minutes to look beyond your contribution percentage.

Ask yourself:

• Does my employer offer a Roth 401(k) option?

• Are my current contributions traditional, Roth or a combination?

• What marginal tax rate am I paying today?

• How much do I already have accumulated in pre-tax versus Roth accounts?

• How might my income and tax situation change throughout my career?

• Am I taking full advantage of the retirement savings opportunities available to me?

These questions don't necessarily have one universal answer. That's precisely why they're worth asking.

A retirement contribution election that made sense five years ago may not be the best fit for your financial situation today.

Think Beyond This Year's Tax Return

Good tax planning isn't simply about paying the least tax possible this April. It's about considering when you pay taxes, how much flexibility you'll have later, and how today's decisions affect the purchasing power of your future wealth.

Roth contributions are only one piece of that strategy. Taxable investments, charitable giving, capital-gains management, equity compensation, HSAs, retirement distributions and many other decisions can all play a role.

For clients, we examine these considerations as part of the comprehensive review process. But as benefits enrollment season approaches, there's one simple place to start:

Log into your employer's retirement plan and look at your contribution type—not just your contribution amount.

You may find that one of your most important tax-planning decisions has been sitting in your benefits portal all along.

This material is for educational purposes only and should not be considered individualized tax or investment advice. Tax treatment depends on individual circumstances. Consider consulting your tax and financial professionals regarding your specific situation.

When the Fed Raises Rates: What Higher Interest Rates Mean for Your Money

Interest rates changed again—and this time, they moved higher.

When the Federal Reserve raises interest rates, the immediate headlines tend to focus on markets and economics. But the effects eventually make their way into everyday financial decisions: what you earn on cash, what you pay to borrow, how much a new home or car costs to finance, and even how businesses decide what to charge and where to invest.

In other words, a rate hike isn't just a Wall Street story. It can be a good reason to review your own financial strategy.

Why Does the Fed Raise Interest Rates?

One of the Federal Reserve's primary tools for fighting inflation is interest-rate policy. When the economy is running too hot and prices are rising faster than policymakers would like, higher rates are intended to reduce demand.

The basic idea is relatively straightforward: make borrowing more expensive and saving more attractive.

Higher financing costs can discourage households from taking on additional debt or making large financed purchases. Businesses face higher borrowing costs as well, which can affect expansion, hiring, investment, and pricing decisions.

Over time, slower demand can make it more difficult for companies to continuously raise prices—helping bring inflation closer to the Fed's longer-term objective.

For consumers, however, the more important question may be: What should you do differently?

1. Take Another Look at Variable-Rate Debt

When rates rise, variable-rate debt deserves attention.

Credit cards, certain home equity lines of credit, and other floating-rate loans can become more expensive as interest rates increase. Even households with strong incomes can find themselves paying significant interest simply because debt that once seemed manageable has become increasingly costly.

That doesn't necessarily mean every dollar of debt should immediately be eliminated. Liquidity needs, taxes, investment opportunities, and the terms of the debt all matter.

But it may be a particularly good time to inventory what you owe and ask:

• Which debts have variable interest rates?

• What interest rate am I currently paying?

• Has that rate increased materially?

• Do I have excess cash that could reasonably be used to reduce expensive debt?

• Does my current payoff strategy still make sense?

For high-income households especially, cash flow can sometimes disguise inefficient debt. A payment may be affordable without necessarily being financially attractive.

2. Make Sure Your Cash Is Actually Working for You

There is another side to higher rates: savers may benefit.

Savings accounts, money-market funds, CDs, and other short-term instruments can offer more attractive yields when interest rates are elevated. That makes this an appropriate time to review where your emergency reserves and other short-term cash are sitting.

However, a better yield shouldn't automatically become a reason to accumulate excessive cash.

Your emergency fund still has a job: providing liquidity when something unexpected happens. Money intended for a home purchase next year has a different job. Money earmarked for retirement several decades from now has another job entirely.

The goal isn't simply to chase the highest available interest rate. It's to make sure each dollar is positioned appropriately for when you'll need it and what you need it to accomplish.

3. Be More Intentional About Spending

Perhaps the most relatable interpretation of restrictive monetary policy is also the simplest: policymakers are intentionally trying to make spending a little less appealing.

That doesn't mean eliminating restaurants, travel, entertainment, or everything else that makes life enjoyable. A financial plan that requires perpetual deprivation probably isn't a particularly sustainable one.

But periods of higher rates and persistent inflation can provide a useful opportunity to examine spending that has gradually become automatic.

Subscriptions accumulate. Lifestyle expenses creep higher. Convenience becomes routine. Raises and bonuses get absorbed into monthly spending without much thought.

A little intentionality can go a long way.

Maybe autumn really is a good time to trade a few happy hours for book clubs, dinners out for dinners at home, or another expensive weekend away for a cozy blanket, a candle, and an evening with nowhere to be.

The objective isn't austerity. It's making sure you're spending deliberately rather than simply spending because you can.

4. Don't Let Interest Rates Dictate Your Entire Investment Strategy

Higher rates can create opportunities in cash and fixed income, but they shouldn't necessarily cause long-term investors to abandon their broader investment plans.

For someone pursuing financial independence or an early retirement, this distinction can be especially important.

A competitive yield on cash may feel attractive today, particularly because it comes with considerably less volatility than equities. But today's interest rate is not guaranteed indefinitely—and long-term financial goals still require a strategy designed around decades rather than the next Federal Reserve meeting.

Instead of asking, "Where can I get the highest yield right now?" consider asking:

"What does this money need to accomplish, and when will I need it?"

That question helps separate emergency savings from near-term goals, intermediate-term investments, and assets intended to fund retirement decades into the future.

Higher Rates Can Be a Financial Planning Prompt

Federal Reserve decisions are important, but your financial plan shouldn't need to be reinvented every time policymakers meet.

Instead, changing rates can serve as a prompt to review the pieces of your financial life most directly affected by them: debt, cash reserves, upcoming purchases, investment allocation, and monthly spending.

If borrowing has become more expensive, it may be time to prioritize certain debts. If cash yields have improved, make sure your reserves are positioned appropriately. If inflation has pushed lifestyle expenses higher, revisit your cash-flow assumptions. And if attractive short-term yields are tempting you away from long-term investments, return to the purpose behind each account.

Sometimes the best response to economic uncertainty isn't making a dramatic financial move.

It's making a few thoughtful ones.

And if that happens to include spending a couple more autumn evenings at home with a good book, a blanket, and a candle, monetary policy could have worse side effects.

Dollar-Cost Averaging During Market Volatility: Why Not To Time the Market

Market volatility has a way of making every investment decision feel more urgent.

When markets move sharply from one day to the next, investors naturally start wondering whether they should wait. Maybe stocks will fall further. Maybe interest rates will change. Maybe the economic outlook will improve. Maybe there will be a clearer opportunity to invest a few weeks or months from now.

The challenge is that volatility rarely provides that clarity in real time.

Periods of uncertainty can create opportunities, but taking advantage of them doesn't necessarily require predicting exactly where the market will go next. For long-term investors, dollar-cost averaging can offer a disciplined alternative to trying to time every market move.

What Is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) is the practice of investing a predetermined amount of money at regular intervals, regardless of what the market is doing.

Anyone contributing to a 401(k) with every paycheck is already familiar with the concept. Investments continue when markets are rising, falling, or somewhere in between.

That can become particularly useful during periods of volatility.

When prices decline, the same contribution purchases more shares. When prices rise, it purchases fewer. Rather than requiring an investor to determine whether the market has reached a bottom, the strategy creates a systematic way to continue participating.

Volatility Can Make Market Timing Especially Tempting

When markets are relatively calm, staying invested can feel easy. Volatility changes the psychology.

A sharp decline can make waiting seem prudent. A quick recovery can make investors worry they've already missed their opportunity. Another decline may reinforce the idea that waiting was the correct choice.

Suddenly, investment decisions are being driven by short-term market movements rather than long-term financial goals.

This is one of the biggest challenges with market timing: you don't have to make one correct prediction. You have to make a series of them.

You need to know when to wait, when prices have fallen far enough, and when to put the money back to work. And some of the strongest market recoveries can begin while economic headlines still look discouraging.

What Happens When You Wait for the Bottom?

Consider an investor with $100,000 in cash intended for long-term investment.

Markets have become volatile, so the investor decides to wait for a better entry point.

Stocks decline 5%. They wait for 10%.

Markets fall further, but headlines become increasingly negative. Now the investor wonders whether an even larger decline is coming.

Then the market suddenly rebounds.

Should they invest now—or wait for another pullback?

This cycle can repeat itself surprisingly quickly. The pursuit of the perfect entry point can ultimately become a reason to remain on the sidelines.

Dollar-cost averaging changes the decision. Instead of trying to identify the bottom, an investor might establish a schedule for gradually putting that $100,000 to work over a predetermined period.

Volatility hasn't disappeared. The need to correctly predict it has.

Volatility Can Also Create Opportunity

Market volatility isn't inherently good or bad. It simply means prices are moving—and those movements can create opportunities.

For investors regularly contributing to their portfolios, lower prices allow new contributions to purchase more shares. For existing portfolios, volatility may create opportunities to rebalance, address concentrated positions, harvest tax losses, or deploy excess cash according to an established investment plan.

This is where having a strategy before volatility arrives becomes especially important.

Decisions made during calm markets can be based on goals, risk tolerance, liquidity needs and time horizon. Decisions made in the middle of a sharp market decline have to compete with fear, headlines and the natural temptation to predict what happens tomorrow.

Dollar-Cost Averaging Doesn't Mean Ignoring the Market

A systematic investment strategy shouldn't be confused with blindly investing regardless of circumstances.

Your emergency reserves still need to be appropriate. Money needed for an upcoming home purchase, tax payment, tuition expense or other short-term obligation may not belong in a volatile investment portfolio at all.

Likewise, changes in interest rates, valuations and economic conditions can affect how a portfolio should be positioned.

The distinction is between responding strategically to changing conditions and reacting emotionally to short-term price movements.

As Investopedia's discussion of dollar-cost averaging versus market timing highlights, DCA can help remove some of the emotion from investing during periods of uncertainty. Market timing, meanwhile, requires investors to correctly anticipate movements that are notoriously difficult to predict.

Lump Sum vs. Dollar-Cost Averaging

There is an important caveat: dollar-cost averaging isn't automatically the best choice in every situation.

If an investor already has a large amount of cash earmarked for long-term investment, investing it immediately gives that money more time in the market. If markets rise during the period in which the investor is gradually investing, a lump-sum investment can produce a better result.

Dollar-cost averaging can therefore represent a tradeoff.

An investor may sacrifice some potential upside in exchange for reducing the risk—and emotional difficulty—of investing a large amount immediately before a significant market decline.

The appropriate approach depends on the investor, the source of the money, the time horizon and the broader financial plan.

Build a Strategy for Changing Conditions

Market volatility is unavoidable. Predicting exactly when it will begin or end is another matter entirely.

That's why a well-constructed financial plan should be built more like an all-wheel-drive vehicle than a strategy designed for one particular set of road conditions.

Sometimes markets will be smooth. Other times investors will encounter inflation concerns, changing interest rates, geopolitical uncertainty, recessions, corrections and unexpected events.

The goal isn't to predict every obstacle before it appears. It's to have a strategy capable of navigating different environments.

For some investors, dollar-cost averaging can be part of that approach. It provides a framework for continuing to invest when volatility makes doing so emotionally difficult—and allows market declines to become part of the investment process rather than automatically becoming a reason to abandon it.

Ultimately, instead of asking:

“Where will the market go next?”

Consider asking:

“Is my financial strategy prepared if volatility continues?”

That's a question a thoughtful financial plan can actually answer.

Disclosure: Dollar-cost averaging does not assure a profit or protect against loss in declining markets. Investors should consider their financial ability to continue investing through periods of fluctuating prices. This material is provided for educational purposes and should not be construed as individualized investment advice.

Does Your Emergency Fund Need a Raise?

An emergency fund is rarely the most exciting part of a financial plan. There’s no market return to watch, no investment strategy to debate, and ideally, you won’t need to touch it very often.

But when an unexpected expense arrives, your emergency savings can quickly become one of the most valuable parts of your financial life.

With inflation changing household expenses, interest rates affecting savings yields, and major costs like housing, insurance, healthcare, and transportation continuing to command attention, 2026 may be a particularly good time to revisit a simple question:

Does your emergency fund need a raise?

How Much Should You Have in an Emergency Fund?

A common rule of thumb is to maintain approximately three to six months of essential expenses in readily accessible savings. That can be a useful starting point, but financial planning is rarely one-size-fits-all.

Someone with two stable household incomes, relatively low fixed expenses, and significant non-retirement assets may have very different cash needs than a single-income household, a business owner, a recently retired individual, or someone whose compensation varies throughout the year.

Instead of focusing exclusively on a rule of thumb, consider what your emergency fund actually needs to accomplish.

If your income unexpectedly stopped tomorrow, how much would you need to maintain your household while determining your next step?

Inflation Can Quietly Shrink Your Financial Cushion

Even if the dollar balance of your emergency fund hasn't changed, its purchasing power may have.

Suppose you established your emergency savings several years ago based on what it cost to cover your mortgage or rent, groceries, utilities, insurance, transportation, and other necessities at the time. If those expenses have increased but your emergency fund hasn't, you effectively have fewer months of protection today.

That's one reason an emergency fund shouldn't necessarily be viewed as a savings goal you complete once and forget.

As the cost of your life changes, the amount of cash required to protect it can change, too.

Your Life May Have Changed, Too

Inflation isn't the only reason to reconsider how much emergency savings you need.

Think about what has changed since you originally established your cash reserve. Perhaps you've purchased a home, welcomed a child, changed careers, started a business, taken on additional debt, increased your monthly spending, or become responsible for supporting another family member.

Homeownership provides a particularly easy example. A renter may primarily need to prepare for an income interruption or unexpected personal expense. A homeowner may also suddenly face a major HVAC replacement, roof repair, plumbing problem, appliance failure, or insurance deductible.

Your emergency fund should reflect the financial responsibilities you have today, rather than the responsibilities you had when you originally set the account up.

What Is an Emergency Fund Actually For?

Emergency savings are designed for expenses that are both important and difficult to predict.

Common reasons households may need to tap their savings include:

• Unexpected car repairs

• Home repairs and maintenance

• Medical expenses

• Temporary unemployment or loss of income

• Unexpected family expenses

• Insurance deductibles

• Essential expenses during a financial transition

The purpose isn't to anticipate every possible emergency. It's to create enough financial flexibility that an unexpected event doesn't immediately require you to sell investments, accumulate high-interest debt, or dramatically disrupt the rest of your financial plan.

That flexibility has value even when the money itself isn't being used.

Where Should You Keep Your Emergency Fund?

An emergency fund has a different job than a long-term investment portfolio.

Its primary responsibilities are liquidity, accessibility, and stability.

Depending on your circumstances, that could mean keeping emergency savings in a high-yield savings account, money market account, or another appropriate cash-equivalent vehicle.

Interest rates matter here. When cash yields are attractive, it's worth reviewing whether idle savings are earning a competitive rate. When interest rates begin falling, however, the answer generally isn't to abandon emergency savings in pursuit of higher returns.

The emergency fund isn't designed to maximize growth. It's designed to be available when you need it.

Don't Confuse Emergency Savings With Other Cash Goals

Another important distinction is separating true emergency savings from money earmarked for expenses you already know are coming.

A vacation next summer isn't an emergency. Neither is an upcoming property-tax bill, planned home renovation, new vehicle purchase, or annual insurance premium.

Those expenses can be addressed through separate short-term savings strategies.

Keeping them separate makes it easier to understand how much of your cash is actually available if something genuinely unexpected occurs.

A Better Question Than "Do I Have an Emergency Fund?"

For many established investors and higher-income households, the answer to that question is already yes.

The more useful question may be:

Is my emergency fund still appropriately sized for my life?

Review your current essential monthly expenses and compare them with the amount of readily accessible cash you've designated for emergencies. Then consider the risks specific to your household.

How secure is your income? How many people depend on it? Do you own property? Are there large insurance deductibles to consider? Do you have variable compensation? Are you approaching retirement or already drawing from your portfolio?

The appropriate answer can look different for every household.

Give Your Emergency Fund an Annual Review

Investment portfolios receive regular attention. Retirement projections are updated. Insurance policies and estate plans are periodically reviewed.

Emergency savings deserve a place in that process as well.

At least annually—and after major life events—revisit your monthly expenses, financial obligations, income stability, and available cash reserves. You may discover that you're holding more cash than necessary. Or you may realize that a reserve established several years ago hasn't kept pace with the life you're living today.

Either conclusion can be valuable.

Your emergency fund doesn't have to be exciting to be important. Its job is to provide stability when life becomes unpredictable.

So, when was the last time you gave your emergency fund a raise?

If you're unsure how much cash makes sense alongside your investments, retirement strategy, and other financial priorities, a comprehensive financial plan can help determine an appropriate balance for your individual circumstances.

How Much Cash Is Too Much?

Cash has become a surprisingly important part of financial planning conversations over the last several years. Following the Great Recession and suddenness of the pandemic, persistent inflation prompted the Federal Reserve to raise interest rates aggressively, and savers suddenly found themselves earning yields on cash that had been difficult to find for years. Money market funds, high-yield savings accounts, CDs and other cash equivalents became increasingly attractive places to keep money.

But market conditions change—and financial plans should evolve with them.

As interest rates move lower, the return available on cash may decline as well. At the same time, inflation can continue to erode purchasing power. For investors who accumulated significant cash balances while yields were higher, this creates an important question: How much cash should you actually keep, and when does holding too much cash become a risk of its own?

Cash Is an Important Part of a Financial Plan

Holding cash isn't inherently good or bad. What matters is the purpose that money serves.

An emergency fund is one of the most obvious reasons to maintain cash reserves. Unexpected home repairs, medical expenses, employment changes and other surprises can happen at any time. Money earmarked for expenses in the relatively near future may also belong somewhere accessible rather than being exposed to unnecessary market volatility.

For retirees, cash can serve another important role. Having funds available for upcoming spending needs may reduce the need to sell investments at an inconvenient time during a market downturn. For professionals in their peak earning years, cash can provide flexibility for upcoming purchases, career transitions, real estate decisions or other major financial goals.

Liquidity has value. The goal isn't to eliminate cash from a portfolio. It's to determine how much liquidity is appropriate for your particular circumstances.

The Hidden Cost of Holding Too Much Cash

The challenge begins when cash accumulates without a specific purpose.

For several years, higher interest rates made it easier to overlook this issue because savers could earn relatively attractive yields without accepting much investment risk. As rates decline, however, cash yields can decline with them.

Inflation adds another consideration.

Imagine your cash savings are earning 2.5% annually while inflation is running at 3.4%. Even though your account balance is earning interest, the purchasing power of that money is effectively declining by approximately 0.9% before considering other factors such as taxes.

Over one year, that difference may not feel particularly significant. Over longer periods and larger balances, however, the cumulative impact can become much more meaningful.

This is one reason investors should distinguish between money that needs to remain liquid and money that is simply sitting in cash.

Cash Can Feel Safe While Still Carrying Risk

When people think about investment risk, they often think first about stock market volatility. Cash generally doesn't experience those daily price swings, which can make it feel substantially safer.

But volatility isn't the only financial risk.

There is also purchasing-power risk: the possibility that inflation causes your money to buy less in the future. There is opportunity cost: money held in cash for long periods may miss opportunities for growth elsewhere. And there is longevity risk, particularly for retirees who may need their assets to support decades of future spending.

The appropriate balance depends on what the money is intended to accomplish.

Cash needed next year and money intended to fund a goal 15 years from now generally shouldn't be treated the same way. A financial plan can help assign different jobs to different portions of your assets rather than expecting one type of account or investment to accomplish everything.

What Can You Do With Excess Cash?

Investing excess cash doesn't necessarily mean moving it all into stocks.

Depending on an investor's objectives, risk tolerance, tax situation and timeline, there may be a range of possibilities to consider. Bonds and other fixed-income investments may play a role for some investors. A diversified investment portfolio may make sense for money with a longer time horizon. Taxable brokerage accounts can also provide access to investments without the age-related withdrawal rules commonly associated with retirement accounts.

That last point is particularly important. There is sometimes a misconception that investing means putting additional money into a 401(k) or IRA and accepting restrictions on when it can be accessed. Retirement accounts are valuable planning tools, but they aren't the only way to invest.

For professionals in their highest earning years, taxable investments can potentially complement retirement savings while creating greater flexibility for goals before retirement. For recently retired investors, coordinating cash, fixed income and longer-term investments can help create a strategy designed around both current spending and future needs.

How Much Cash Should You Keep?

There isn't one cash target that works for everyone.

Rules of thumb about keeping several months of expenses in an emergency fund can provide a starting point, but financial planning becomes more nuanced as wealth and financial responsibilities increase. Someone approaching retirement may have very different liquidity needs from a professional with stable income and decades until retirement.

Rather than focusing exclusively on a specific dollar amount, consider what your cash is intended to fund. How much is your emergency reserve? Are there major purchases or expenses expected over the next few years? How stable is your income? If you're retired, where will upcoming distributions come from? And once those needs are accounted for, how much cash remains without a defined purpose?

That final amount is often where a deeper conversation becomes worthwhile.

Give Every Dollar a Purpose

Cash serves an important role in nearly every financial plan. The objective isn't to chase the highest possible return on every dollar or invest money that needs to remain readily available.

Instead, the goal is intentionality.

As interest rates and inflation change, a cash strategy that made sense a few years ago may no longer be the best fit today. Periodically reviewing your savings, investment accounts and upcoming financial needs can help determine whether your money is positioned appropriately for both the life you're living now and the goals you're working toward.

If you've accumulated a larger cash balance, are approaching retirement, recently retired, or simply haven't reviewed how much you're holding in savings, this may be a good time to revisit the conversation. A comprehensive financial plan can help determine how much cash you truly need, where that cash should be held, and whether excess savings could be put to work more effectively elsewhere.

Why Patience Is Still One of the Greatest Investment Strategies

We're living in a world that rewards speed.

Need groceries? They can arrive in an hour. Want to learn a new skill? Thousands of videos are available instantly. Have a question? Artificial intelligence can generate an answer in seconds. We've become accustomed to immediate results in nearly every aspect of our lives.

Yet some of the most meaningful things in life still refuse to be rushed.

Strong relationships are built over years, not weeks. Successful careers are shaped by consistent effort rather than overnight success. Businesses grow through continual refinement, and financial independence is rarely achieved through one perfect investment. Instead, it's the result of hundreds—sometimes thousands—of thoughtful decisions made consistently over time.

As investors, it's easy to forget that while technology has accelerated the pace of information, it hasn't changed the fundamental principles of building wealth.

Market Rotations Are a Reminder That Patience Matters

During our recent Quarterly Market Outlook, we discussed another market rotation—a natural shift in leadership from one sector, industry, or investment style to another.

These rotations happen throughout every market cycle. Companies that lead one year often give way to different leaders the next. While headlines frequently focus on whichever investments are performing best today, history reminds us that markets are constantly evolving.

For investors in their peak earning years, this can be especially challenging. Between demanding careers, family responsibilities, and an endless stream of financial news, it's tempting to believe every headline requires action.

Likewise, for those approaching or enjoying retirement, periods of market change can understandably create questions about whether their portfolio remains aligned with their long-term goals.

In both cases, reacting emotionally to short-term market movements often works against the very outcomes investors hope to achieve.

Wealth Is Built Through Consistency, Not Constant Change

One of my favorite analogies is planting a garden.

You wouldn't plant seeds on Saturday and expect to harvest vegetables by Monday. The growth begins long before you can see it. Healthy roots develop beneath the surface through consistent watering, sunlight, and care.

Investing works much the same way.

Long-term wealth is created through disciplined saving, thoughtful portfolio construction, tax-efficient planning, regular reviews, and the willingness to stay committed through changing market environments.

Patience isn't passive.

It's an active decision to trust a well-designed financial plan while making thoughtful adjustments as life changes—not because markets are noisy, but because your goals evolve.

Financial Planning Is About More Than Investment Returns

One of the biggest misconceptions about working with a financial advisor is that success is measured only by portfolio performance.

While investment management is certainly important, comprehensive financial planning extends much further.

It means evaluating retirement readiness, protecting your family through appropriate insurance strategies, reviewing estate planning documents, minimizing taxes where possible, planning charitable giving, managing cash flow, and ensuring your investments continue to reflect your personal goals and values.

For many of our clients—including successful professionals, business owners, creatives, and those transitioning into retirement—financial confidence doesn't come from trying to predict the next market move.

It comes from knowing there's a thoughtful strategy in place regardless of what markets decide to do next.

The Power of Small Decisions

When people look back on financial success, they often search for one defining moment.

The reality is usually much less dramatic.

Increasing retirement contributions each year.

Rebalancing a portfolio during annual reviews.

Updating beneficiaries after major life events.

Building an emergency reserve.

Paying down debt consistently.

Teaching children healthy financial habits.

None of these decisions make headlines.

Together, however, they create extraordinary outcomes over decades.

Just as compound interest rewards patience, life tends to reward consistency.

Growing Together

Launching Elswick Investments has reinforced these same principles for me personally.

Building a firm centered on relationships, thoughtful advice, and long-term planning isn't something that happens overnight. Like every worthwhile endeavor, it continues to grow through listening, learning, refining, and serving others well.

I'm incredibly grateful for the trust our clients have placed in us and for the opportunity to walk alongside them through each season of life. Watching clients accomplish goals they once thought were years away remains one of the most rewarding parts of my work.

In a world that encourages us to expect immediate results, patience can feel countercultural.

Yet whether we're cultivating a garden, building a business, strengthening a family, or creating lasting financial security, the principle remains the same:

The most meaningful growth often happens quietly, beneath the surface, long before anyone else can see it.

If you're looking for a financial planning partner who believes successful investing is about more than chasing headlines—and instead focuses on building a strategy that supports the life you want to live—we'd love to start a conversation.