On the day you retired...

[jIMOh]

What was your cash position on the day you retired?

2 years expenses in cash?
4 years?
same allocation as it was the day before you retired?

As you progressed through retirement, did you lower or raise the cash position as a multiple of expenses?

 

[old woman]

I didn't have any cash same as the day before retirement. My final paycheck went to income taxes and 401K ROTH so was zero exactly since I did my own check.

 

[W2R]

What was your cash position on the day you retired?

2 years expenses in cash?
4 years?
same allocation as it was the day before you retired?

As you progressed through retirement, did you lower or raise the cash position as a multiple of expenses?

On the day I retired in 2009, I had 4.9 years' expenses in cash (using my 2010 spending as the definition of a year's expenses). It was the same as the day before I retired because it took months for my "retirement goodies" (pay for unused vacation time and so on) to show up.

I lowered my cash position a little as I progressed through retirement, although I right now I happen to have 5.5 years' expenses in cash (using my 2013 spending as the definition of a year's expenses). I am thinking of possibly moving to a nicer house if I ever see one I like better than the one I have. So, I like having a lot of cash just in case I need to pounce on a house.

I don't think this much cash is necessary, though.

 

[Theseus]

What was your cash position on the day you retired?

I made sure to have enough in my wallet to buy my [ex]coworkers some beer at the local sports bar that afternoon.

As you progressed through retirement, did you lower or raise the cash position as a multiple of expenses?

FWIW. I've never been one to pay the least bit of attention to rules of thumb for having available cash. And it always seemed to me, that if I were to bury anything in the back yard with the expectation it would hold value, cash isn't going to work very well for that. Not having a paycheck to rely on for income has given me some pause, but now that we are getting our retirement income streams set up and flowing I really don't anticipate doing things much differently.

 

[jon-nyc]

I had probably 3-4 years. I also had/have another 4-5 years in ibonds which some people think of as cash.

 

[kimcdougc]

Hmm, My DH is getting ready to take the plunge. I was thinking of 2 years worth of expenses as just in case.

 

[LOL!]

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.

 

[mf15]

Well when I retired they gave us our regular salary for a year,plus my pension started
the next day, so actually had more money coming in than if I was working,at least for
one year. Bridged me until I could collect SS.
Old Mike

 

[scrabbler1]

On the day I retired, I had just faxed 10 pages of instructions to my 401k/ESOP plan administrator to tell them how to liquidate my holdings. I was using NUA to liquidate the company stock, so a condition for doing that was to empty out the rest of my holdings in the plan. I did a direct rollover of most of the non-company-stock holdings into an IRA while cashing out the small after-tax contributions I had in the plan. I also received my last paycheck which included some unused vacation time I did not know I even had.

A few days later, I had a lot of cash in my bank account ready to be invested in the big bond fund which has been generating monthly dividends to pay my bills ever since. A week later, after I received the trustee-to-trustee rollover check from the admin, I visited my Fidelity office to invest the whole shebang. But for a few days I had about 14 years of expenses in cash sitting in the bank. So, that's my answer - 14 years.

 

[MBAustin]

On the day I retired, we probably had less than 6 months living expenses in the bank. But a month later we had 3+ years because I got my final paycheck (including unused vacation pay) and my deferred compensation payout (which unfortunately I had to take immediately as a lump sum because I was younger than 62).

 

[Palmtree]

I have not retired yet, but plan on it in the next year. I don't plan on having cash in the traditional sense. ($$ in checking, savings or CD) There will be a pension for the basics and I will have a couple of years equivelent in I-bonds that I could cash if needed.

 

[sengsational]

1.5 years of cash at retirement, 6 years of stable value.

Today I'm at about 2 years of cash, but I've been down to less than a year's worth. A recent rebalance pushed me back up.

Same asset allocation targets before and after retirement.

 

[rodi]

I retired in June and made sure I had cash enough to cover through the end of this year, and next year. So 1.5 years of the withdrawal amount. It's not my entire spending budget - since we have rental income and DH gets SS... but it's still a chunk.

I have a small inherited IRA and will take an RMD before the end of the year - rather than rolling that to the taxable account and reinvesting, I plan on setting that aside for some planned home improvements.

 

[tuixiu]

Several studies have shown that one shouldn't have any cash when they retire because it is a drag on portfolio return.

Couldn't one take this further and say everyone's portfolio should be 100% small cap stocks since they return more over time? Anything would be a drag on portfolio.

 

[6miths]

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.

Pretty much like this. I'm sure that I had some cash in some accounts as dividends came in or that just hadn't been allocated yet but it wasn't purposeful and I didn't feel then need to have a pile of money lying around doing nothing.

 

[pb4uski]

At the time I retired we had a little less than a year's worth of expenses in cash. I later decided to change my AA from 60/40/0 to 60/34/6 with the 6 representing about 2 years of withdrawals. In that first year I took advantage of 0% capital gains rate and built up our cash position.

 

[Car-Guy]

When I read the original posters questions, I thought cash was what you had in your checking account(s). As I read though some of the responses I see some folks consider other things as cash. ibonds, CD's, other.

To me cash is what I have in my checking accounts..... To support my initial planned retirement lifestyle, I started off with an estimated 4 to 5 years of cash. I've only been retired a few years now and I have not adjusted my AA yet to maintain that. As it is turning out in my case, I'll probably keep a years worth of cash in my checking accounts.

 

[MichaelB]

When I retired almost half my portfolio was in cash and another big chunk was in auction rate muni funds. Now we keep the current year budget in cash, and in short / med term munis one year of budget together with large planned expenses and committed funds.

 

[jkern]

Started at age 51 (2009) with about 10 years cash. Bought 3 rental properties (2010-2012) and have been living off the cash and rental income.

Today, 5 years later, I have 6 years cash (lower yearly cash needs due to rental income).

By the time I'm 62 (start Social Security), I expect to have about 1 year cash.

 

[jebmke]

probably a couple of weeks worth of spending

 

[Sea Kayaker]

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.

 

[Lagniappe]

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.

 

[Animorph]

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.

 

[jguild2120]

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.

 

[FreeAtLast]

About a years worth of cash.