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Old 08-30-2014, 11:09 AM   #21
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I expect to have about 3 years living expenses in cash once I pull the plug in a couple of weeks. I like having it on hand for stock buying opportunities - this strategy has worked very well in the past few years when great companies suddenly get punished for no other reason than some dubious rumour. For example, Canada's largest telco and great dividend payer, Bell, experienced a sizeable correction when it was rumoured that Verizon was entering the Canadian market. It never happened. I bought a ton of Bell stock, whose dividend spiked to 6% on the stock price decline. I have employed this strategy many times with other companies who suddenly went of sale. Cash on hand is essential to my preferred investing style which I describe as a combination of long term dividend investing with a sprinkle of market timing.

My Bell dividends are a big reason I am about to ER in two weeks.

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Old 08-30-2014, 11:20 AM   #22
Recycles dryer sheets
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I had about three years of expenses in cash when I retired (the first time) in 2012. I had cashed out a bunch of options and restricted stock in my last week, and the money all hit my account my last day of employment.

I slowly worked about half of that into my Vanguard portfolio allocation over the next year. Then I got an opportunity I found hard to pass up, and have been too busy to deal with it. Probably time to auto-invest it, so I don't have to make a decision every month about what to do.

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Old 08-30-2014, 03:44 PM   #23
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I retired in 2007, was worried about it, and had about 30% cash. That was only about 3 years of expenses without SS and with kids in college. The plan was to spend it first, so only a brief drag on portfolio growth. However, DW decided not to retire then and we were able to reinvest much of the original cash during the downturn. A little after the market bottom we were out of cash (100% equities) and selling a little each month to fill in what DW's income didn't cover. Given that we had no knowledge of the future it all worked out very nicely.
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Old 08-30-2014, 04:54 PM   #24
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4 years cash. I started saving for retirement in 1982. It's been a roller coaster for 32 years. I never sold but I always did had cash on hand and still do. Having buffer of cash gave me the courage to look away (and pickup a nice bottle of red) when the market got ugly. Just look away.
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Old 08-30-2014, 05:10 PM   #25
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About a years worth of cash.
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Old 08-30-2014, 07:17 PM   #26
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When I began withdrawals from my portfolio, I had about 4 years worth of cash. After a while, it occurred to me that, along with the quarterly didvidend payouts from the taxable portion of my investments, this meant I could live for quite a bit longer than 4 years without selling any shares. This seemed like too much, so I bought some more equities and reduced my cash to about 2 years worth. I'm now standing at about 18 months in cash, but dividend payouts will keep me going for a bit longer than that. Not sure how low I will allow the cash stash to go before selling a few equities but, as they say, "We'll see how it goes."
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
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Old 08-30-2014, 10:00 PM   #27
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One year in cash.
And if I claim to be a wise man, it surely means that I don't know.
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Old 08-30-2014, 10:34 PM   #28
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About 4 years now for when I retire next year, 6 if you consider DW (younger) will continue to work. I include money markets as cash. I'll probably roll some of that into short bonds and munies before I pull the plug.
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Old 08-31-2014, 02:58 AM   #29
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Originally Posted by LOL! View Post
I had no cash the day I retired. I don't believe in cash unless it return 5% or more.

Several studies have shown that one shouldn't have any cash when they retire because it is a drag on portfolio return. Cash is simply a mental crutch that some folks use. But if you are one of those folks, then by all means have some cash, but it will cost you.
cash is a drag but the first 5 years are a different story. if the equity portion has not yet gone through a good up cycle to gain a cushion then spending down from equities can be quite damaging if poor sequencing happens early on. .

it is akin to a string of losing trades if the poor sequencing strikes up front.

that is why the rising glide path is showing more and more promise. you reduce equities early on to 20-30% protecting the early years and increase to your max allocation dollar cost averaging in the next 15 years.

of course if the first 5 years are good you will miss some gains but i think most retirees would not mind giving up some upside potential which may do nothing for their lifestyle at this point for better down side protection if worst case scenerios play out which can be far damaging then the upside given up.
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Old 08-31-2014, 04:07 AM   #30
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I guess the term "cash" is a bit nebulous to me. I define cash as any easy to obtain funds that costs little or nothing to convert and can be done in a day or two. IOW, the conversion process isn't cumbered with sales charges, paper losses, etc. So, for me, that would include savings accounts (of which I have virtually none), checking accounts in which I keep $10K to $20K since monthly expenses could chew that up in 4 to 5 months. I also have significant I-bonds which are turned into cash at a bank if they haven't changed the rules - so far, I've let these ride as they are a very useful vehicle for "titrating" ones taxes. If you have $20K and $10K of it come from proceeds, you can take the money out and only pay taxes on $10K. I also have a stable value fund and stock fund within my 401(k) which can e-transfer cash to my bank in less than 48 hours. Admittedly these transaction have tax consequences, but the "cash" is available very quickly.

Ready cash (in the wallet, bank accts., etc.) are minimal (I mentioned as much as $20k, but I have access to 10 times that with a phone call or e-transfer).

So when I retired, and shortly after, my cash was about the same. I went through the "easy" cash pretty quickly as I paid the taxes on Roth conversions. Now, I get "cash" (e.g., in the check book) as I need it from my 401(k).

Even Roths could be considered cash since the conversion to cash is quick and is tax free.

But, for the most part, I just don't keep much unproductive cash around - just what I need to never worry about writing a good sized check when I need to. YMMV.
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Old 08-31-2014, 04:42 AM   #31
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Currently have about 10 years in cash or equivalents (high yielding savings accounts).

Consider myself semi-retired (self-employed and FI) since this year.

It's my hedge against the next drop in the stock market, then I'll adjust. Not worried about the loss of return in the mean time.
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Old 08-31-2014, 07:00 AM   #32
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Since retiring last year, our AA includes 5% cash, which is roughly equal to 2 years spending not covered by other sources of income. Plus a few one-shots that we know about. We'll probably reduce this in the future after we have a little more experience. It's definitely a drag on performance and the balance really hasn't dropped much. Dividends from the taxable account go straight into the cash account. That, plus other sources of income, seems to cover all our expenses. So I'm definitely considering dropping to 1 year and possibly lower.
Retired at 52 in July 2013. On to better things...

AA: 45% stock, 35% bonds, 15% real estate, 5% cash
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Old 08-31-2014, 09:48 AM   #33
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We had about 5 years of expenses in cash, but we had just sold our home. Gradually, have been bringing it down to 2-3 years, where I think we'll keep it.
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Old 08-31-2014, 10:17 AM   #34
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In 2012 when I retired we had about 60% of our portfolio in cash because we had sold a business the year before. We have been dollar cost averaging into the market and are just now getting to our 50/40/10 allocation target (though our bond allocation is mostly in 1-5 year funds whereas much of that eventually needs to migrate into intermediate term funds).
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Old 08-31-2014, 12:46 PM   #35
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I hope I am retiring in about 7 months and I have 2 years in liquid cash accounts now and about 0.5-1 year in retirement accounts that could be liquidated. When I know more about my retirement (meaning how much part-time work I'm willing to do) I will invest some more of my cash holdings in something that is money-making.

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Old 08-31-2014, 01:05 PM   #36
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We had 4 years. Didn't really plan this, about half was due to an inheritance. Since we were not going to withdraw for a few years, we ended up keeping it there. We are down to 2.5 or so now.
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Old 08-31-2014, 03:30 PM   #37
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I had about 3yrs after-tax expenses in cash, but one of those years was really the "travel splurge budget" that we had set aside while getting ready to retire. This was so we could travel well the first year or two without worrying about market shenanigans.

This is in addition to the 5% cash in our retirement portfolio that is a standard part of our AA.
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
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Old 08-31-2014, 03:45 PM   #38
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retiring in 11 months from today and pondering this exact question.

i intend to follow the rising glide path pattern so as of last week we reduced equities to about 34% in preparation .

now we are thinking about the cash issue since i will hold off until fra for ss.

living here in nyc (queens not manhattan) will not be cheap but this is where our kids and grandkids are so this is where we will be.

my inclination is to tuck 3 years away but with a big travel budget needed the first few years i am wondering if 3 years will be to light as we may actually end up with 2-2-1/2 years left.

i think with delayed ss we are going to be very dependant on our own portfolio. the rising glide path in my opinion meshes nicely since it will give us more down side protection early on when we are dependant the most.

once ss kicks in and the portfolio goes through an up cycle we will be less dependant on it and the higher equity levels will mesh better with less sequence risk.

all this stuff makes my hair hurt. .
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Old 08-31-2014, 04:05 PM   #39
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Since retiring 13 years ago, the cash portion has varied between one and two years of spending. I think of it as a buffer, and it's comforting.

Less than a year would be ok, down to maybe six months, and two years is my absolute upper limit.
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Old 08-31-2014, 04:09 PM   #40
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the reality is after a few up cycles even zero cash and 100% equities past just about every 30 year time frame.

the extra gains in the up years from not having the weight of cash and bonds more then cushions any spending from equities in down years.

the only exception is the first 5 years , you really do need quite a bit of downside protection as those are the most vulnerable times.

during the early years it may be worth giving up some up side gains for more worst case scenerio protection.

that is the route i am planning on .

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