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View Poll Results: Cash on hand at beginning of ER?
Less than 6 months of living expenses (LE) 12 11.11%
Between 6 mos up to 1 year of LE 10 9.26%
Over 1 and up to 2 years of LE 23 21.30%
Over 2 and up to 3 years of LE 11 10.19%
Over 3 and up to 4 years of LE 16 14.81%
Over 4 and up to 5 years of LE 5 4.63%
Over 5 years of LE 31 28.70%
Voters: 108. You may not vote on this poll

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Poll:How much cash at beginning of ER?
Old 11-29-2012, 08:31 AM   #1
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Poll:How much cash at beginning of ER?

As a recent retiree, I'm curious at the how much cash (in terms of annual living expenses) did you have when you ER'd. Or for those planning ER, how much cash do you plan on having when you ER? By cash, I mean savings, checking, or money market accounts. But if you count anything else as cash, include that, too.
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Old 11-29-2012, 08:47 AM   #2
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I had about 3 years, but that's partly because I wanted money on the sidelines for investing, totally apart from retirement timing. I plan to hold 1-2 years worth, probably what you're looking for BUT that will flucuate somewhat with markets.
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Old 11-29-2012, 10:01 AM   #3
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I'm currently working, but I am planning on a bit over 1 year of expenses in cash for when I retire. Now, this is what I plan to spend down during the year, and then replenish at the beginning of the following year (with a bit of a buffer, thus the "over" 1 year of expenses).
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Old 11-29-2012, 11:29 AM   #4
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As a 2008 retiree I voted two years . I only had one-year in cash when I retired and we all know how that year played out .
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Old 11-29-2012, 12:06 PM   #5
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I had a little over 5 years of expenses, in cash, at the time. Now that the market has recovered I have less.
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Old 11-29-2012, 12:22 PM   #6
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Because my ER plan included a steady income stream via monthly dividends from a big bond fund, I did not have a lot of actual cash on hand sitting around, maybe 1 month of expenses.
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Old 11-29-2012, 01:14 PM   #7
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With a buckets approach I have more then 5 years worth. Based on the results, it looks like the poll has too many short-duration choices.
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Old 11-29-2012, 01:26 PM   #8
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Have 4 years but looking to make it 5 max as market recovers. Reason for 5 years as I hope to never have to sell in down market to pay expenses also when and if another large plunge i may want to buy the plunge . I use two bucket system and WDs based on invested assets performance not to exceed 5% after inflation adjustment .
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Old 11-29-2012, 01:41 PM   #9
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We have another 6 years of payments coming in on a very well secured deal where we sold something. It is almost enough to live on. Despite that, and realizing stuff happens, we're going to have a couple of years worth of living expenses in cash when I hang it up next March. I've come up with a different kind of plan from reading things here and my wife agrees. We're going to put $50,000 in two different bank accounts on April 1, 2013. She will use one and I will use the other. The payments coming in will cover most of our basic living expenses. The $50,000 will be a cushion so we don't have to worry about it. Both of us are pretty thrifty, but I don't want either of us worrying about going out to dinner or buying something we want. On April 1, 2014, I expect we will still have $25-30,000 each in those accounts, unless we go kind of crazy in the first year of full time retirement. We'll meet with the financial guy in April, re-balance accounts and get the balances in the two accounts back up to $50,000. If we're too optimistic about cost of living in retirement, maybe we'll put a little more in there. If we're doing good, maybe a little less or maybe we'll take a nice trip.

Our cash balances will continue to grow for the 6 years until I'm just about at the maximum SS age. SS will replace about 75% of the payments we're getting and our retirement accounts should be substantially larger than they are now. And, when you're 70, it's probably ok to dip into principal a little bit if you need to, but I don't think we'll need to.
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Old 11-29-2012, 01:48 PM   #10
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Originally Posted by GrayHare View Post
Based on the results, it looks like the poll has too many short-duration choices.
Depends on your income streams in retirement.

I had less than 2 years in living expenses, but I had private pensions that covered 70% of living expenses so the chances of needing that cash was, I hoped, quite small.
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Old 11-29-2012, 02:05 PM   #11
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Depends on your income streams in retirement.
Sounds like you are thinking votes rather than poll choices. I'd expect the vote results to form a bell curve, but at the moment the top voted is a choice at one end of the range.
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Old 11-29-2012, 02:08 PM   #12
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Depends on your income streams in retirement.

I had less than 2 years in living expenses, but I had private pensions that covered 70% of living expenses so the chances of needing that cash was, I hoped, quite small.
In reality, one could have an extended timeframe to cover, yet still have little in cash.

For instance, in preperation for expected retirement in early 2007 for both DW/me, each had "sold off profits" from many prior years and had five years worth of cash (including taxes due on withdrawls).

However, since that time we have reduced the target by one year, becoming more comfortable in retirement without any income sources (such as pensions or SS) over the last five years. Of course, in our case we did convert part of our investments to an SPIA, which acts as a non-Cola life pension.

In reality, we are still living primarily on our investments, with two small DB pensions (DW) starting in June, and her FRA SS starting a year after that. In addition, I'll claim 50% of her SS as soon as she starts it, along with my SS at age 70.

Over the next five years, our cash accounts will be greatly reduced "in volume", but we still will maintain the current four year target in cash, regardless of other income sources...

I'll agree that it seems that most don't plan on keeping that many years in reserve, regardless of income sources. For me/DW, that's too little. But than again, we are getting more conserative as we age.
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Old 11-29-2012, 02:23 PM   #13
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I had more than 3 years at ER, but only because I received a large lump-sum taxable distribution from my former employer (no other option because I was under 62).
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Old 11-29-2012, 04:23 PM   #14
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I had and have kept a small amount of actual MMF cash -- less than 1 year. But I have about 5 years in the TSP G Fund which is a principle protected bond fund that is as safe as cash.
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Old 11-29-2012, 04:35 PM   #15
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As a 2008 retiree I voted two years . I only had one-year in cash when I retired and we all know how that year played out .
Which is why I voted for 3-4 years. Wouldn't want to be cut short in a meltdown!
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Old 11-29-2012, 05:25 PM   #16
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Which is why I voted for 3-4 years. Wouldn't want to be cut short in a meltdown!
Rethinking it I would definitely go for three years .When I retired I had a survivor pension & survivor SS that accounted for my needs budget. The withdrawals from my stash accounted for my wants and I really cut back my wants for two years. .
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Old 11-29-2012, 05:33 PM   #17
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I guess by this definition, if I include munis and CDs, I am 100% cash (except tiny annuities bought this year). So I am planning for $85k-100k withdrawals each year for about 50 years.

Quote:
Originally Posted by David1961 View Post
Or for those planning ER, how much cash do you plan on having when you ER? By cash, I mean savings, checking, or money market accounts. But if you count anything else as cash, include that, too.
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Old 11-29-2012, 05:36 PM   #18
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I will have over 4 years worth of spending on hand as that is what it will take to get me to 59 1/2 and have access to tax deferred accounts. Once I hit that milestone I'll pare it back to about 2 years worth.
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Old 11-29-2012, 05:44 PM   #19
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Quote:
Originally Posted by David1961 View Post
As a recent retiree, I'm curious at the how much cash (in terms of annual living expenses) did you have when you ER'd. Or for those planning ER, how much cash do you plan on having when you ER? By cash, I mean savings, checking, or money market accounts. But if you count anything else as cash, include that, too.
I think the poll as stated will not really help you. The amount of cash to hold should depend on the shape of the yield curve IMO. When I retired the real rate of return on cash was perhaps 2% (4% in Vanguard MM and maybe 2% inflation).

Right now the real yield on cash is negative.

Assuming you are trying to set up a safe stash, why not allocate some to these "buckets":
1) a money market fund or similar
2) a 1yr CD or similar
3) a short term bond fund of 2 years duration or similar duration safe security
4) maybe longer duration assets

The idea is to have the maturities coincide somewhat with your need to spend. Over the longish term this should work out fine I think. In our case because cash rates are so low, the #1 above gets only a few months funding and I skip #2, just fund #3 and #4. As bond market conditions change I'll adjust these.
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Old 11-29-2012, 05:50 PM   #20
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I plan to have at least two years worth of living expenses in cash or near cash in various currencies at all times. Unless I make a lot of new investments, I could have over seven years worth when I pull the plug in the middle of 2013.
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