Bank Failures – What Retirees Should Know + What Now?

Silicon Valley Bank has gone under with Signature Bank following close behind. This has a lot of people worried about their cash.

Today we will briefly discuss what’s going on and what to do with your cash and investments, and a free tool to check if you are fully covered by FDIC insurance.

Bank Failures – What Retirees Should Know + What Now?


Full transcript:


Alex Okugawa

Alex Okugawa 0:00
Silicon Valley Bank has gone under with Signature Bank following close behind in this has a lot of people worried about their cash. So today we’re going to talk about what’s going on what to do with your cash and investments and a free tool to check if you are fully FDIC insurance covered. Stay tuned.

Hey there, it’s Alex Okugawa with One Degree Advisors and we help you gain confidence in your retirement. So Silicon Valley Bank, otherwise known as SVB, has gone under. And this is the second-largest bank collapse in US history and has a lot of people scared because it’s very reminiscent of 2008, where banks started to go under. So first, let’s start what happened?

SVB was a 40-year-old bank whose primary customers were startups and entrepreneurs, as you’ll see on the chart on the screen. Now, one of the problems with SVB was a large portion of their balance sheet was in government bonds, especially with mortgage-backed securities. So that might sound pretty reminiscent of 2008. Now, as interest rates have gone up, the value of the bonds on their books on their balance sheet went down. Now, if they were able to hold these bonds all the way through to maturity, they probably would have been okay. But they had to start selling some of these bonds to shore up their balance sheet and make cash available. As their customers started pulling out more money, more sales had to occur. As you’ll see on the screen here, the impact of these unrealized security losses on their capital ratios was pretty significant. Now, when people started finding out that the bank was selling these bonds, and the securities at losses, a lot of people started freaking out. And so you saw a lot of people on social media and Twitter, especially people in venture capital tweeting about the problems that might be happening at the SVB bank. This concurrently caused the bank run, a lot of people started freaking out, they were withdrawing their money very quickly, this created a bank run. And so the bank had to sell more assets at further losses, creating a lot of problems. And we’ve seen a similar situation at Signature Bank.

Now, the thing to note here is the Fed and Treasury and FDIC have jointly stepped in and established an emergency-style bank and made a statement that all depositors will be made whole, even if they had deposits above the FDIC insurance limits. So what should you do with your cash? Well, the first thing is, you’re gonna want to make sure that you are under the FDIC insurance limit. There’s a great tool provided by the FDIC that allows you to put in your bank accounts. So that includes like the registration, the titling the ownership category, and that’s going to tell you whether or not you are fully FDIC insurance covered or not a lot of people think it’s just $250,000. But depending upon your titling and the ownership category, you might actually have more than you think.

Now, what happens if you have more cash at the bank than you are covered? What should you do with that? Well, you could transfer that to some other banks to get under that FDIC insurance limit. The other thing you could do is look at money market funds, or even plain old-fashioned treasury bonds. Both can be bought inside of a brokerage account. And for some of our clients that have been wanting to do something more with their cash and diversifying their cash a bit, we have been helping them, you know, make sure that they can buy money market funds, buy treasury bonds, it provides a very conservative way to invest that money that keeps the money relatively safe.

And the final thing to remember here is that cash is not an investment plan. It’s part of your financial plan, but it’s not part of your investment plan per se. Okay, if you have a long-term investment plan news that we’ve been seeing this past week, hopefully, it doesn’t rattle you too much. It shouldn’t cause you to change your investment strategy and totally change the allocation. If you and your advisor have set things up for the long term, news like this really shouldn’t rattle you. Now we recently posted a video how much cash should you have in your retirement. We’ll link to that video. Once again, this is Alex Okugawa with One Degree Advisors and if you found this video helpful, please like and subscribe. And if you’d like to learn more about how we can help you with your retirement, visit our website at

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