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Old 11-18-2020, 10:53 PM   #41
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I had about 2.5 years of expenses in cash, when CDs were earning above 2%+. With CD rates so low , I'm down to 1.5 years of expenses in cash and paid 50% of my remaining mortgage and got a HELOC instead. I shifted to a HELOC with 2.24% rate, so even if I sink more and more $cash into my house, I can still get it back if I need to.
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Old 11-18-2020, 11:59 PM   #42
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You will find a use for it.

Cash is nice to have so that you can avoid creating taxable events when you need extra money - whether via IRA withdrawals or capital gains. In retirement, raising your income can cost things like ACA subsidies and other benefits, so there is an even higher incentive to keep your taxable income low and adequate cash-on-hand. We keep at least $50K accessible for bills and a sizable amount more in our safe for if it gets shiity. We use about $25-30K/yr. on top of our other income, somewhat less this year.

Your cash can help fill in the unexpected gaps each month/year. It's nice when that cash can come from investments that aren't working that hard for you anyway - like your cash reserve. There's usually something in the portfolio that you're not depending on for regular income. When you need to replenish your cash, that will be the first investment to go, and you can rebalance.

I always pay attention to the timing of our retirement withdrawals, and how they will impact us at the end of the year tax-wise. We try to dedicate our IRA to pay for unexpected repairs and maintenance on our rentals so that we can deduct the expenses and wash out the tax effect.
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Old 11-18-2020, 11:59 PM   #43
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I keep between 0 and 6 months cash on hand. The next month or so of expenses is in the checking account. Anything beyond that sits in a HYSA earning 0.55% APY ("not nothing" as someone said above). Everything else is in the portfolio at a target AA of 96/4. When I get low on cash I refill from taxable.

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Old 11-19-2020, 02:00 AM   #44
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In general I don't keep much cash. As a practical matter I usually would want at least 2 months of regular expenses that I have in the bank. Rarely does it go below that. Right now I have more as I had some cash earlier in the year that I was going to use for some new furniture and window coverings after a home remodel. Covid delayed it all so that money is just sitting there.

In the portfolio for a few years I did keep something that was near cash. But, a few years ago I got rid of that and usually when I need money I will rebalance and then take any excess I need out of whatever is doing the best. As a practical matter I can usually take it from bond funds with no difficulty.
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Old 11-20-2020, 04:57 PM   #45
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If you keep cash and you feel bad about it not gathering interest or dividends and you might like to travel sometime in the future when its safe again then you can open a savings account at a bank called Bask Bank and they at least give you airline miles... with $100K you get 100K miles the first year and a few more for the sign up bonus.... you can do a lot of traveling with 100K miles a year... or gift a trip for someone you like...
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Old 11-21-2020, 08:28 AM   #46
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Originally Posted by slowsaver View Post
This is a pretty important point I had not thought of. In order to avoid the ACA 'cliff,' you'd want to stockpile enough cash to not generate too much income.
Am figuring out now that if you also want to do ROTH conversions you should have even more cash on hand.
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Old 11-21-2020, 10:46 AM   #47
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Originally Posted by Stormy Kromer View Post
I keep enough cash to supplement my guaranteed sources of income to met my living expense for 3 years. I've seen many downturns over the years and figure 3 years worth of cash should get me through a bear market without selling equities.

If my guaranteed fixed income (pension, SS..) met my living expense I would only keep an emergency fund of cash. Enough to cover unexpected repairs and emergencies. The rest would be fully invested to my asset allocation.
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Old 11-21-2020, 01:19 PM   #48
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My pension covers my day-to-day expenses so I only have 3% emergency cash, 5% cash, 5% bonds, rest equities. No idea why I have cash

Bottom line: whatever let's you sleep well at night
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Old 11-21-2020, 06:30 PM   #49
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Originally Posted by PaunchyPirate View Post
I'm age 58 and wrapping up year 2 in retirement and I'm still sitting on somewhere between 18 months and 3 years of cash. The range is because it depends on how much I use dividends from my taxable account to supplement the cash. I'll probably burn that down for 2021 before selling anything to replenish it. When I do sell, I will likely sell enough for 18 months to 2 years of living expenses.

In 2019 and part of 2020, I used the dividends to supplement my spending. But when the COVID downturn started in Spring 2020, I turned on the reinvesting of my dividends to buy cheaper stocks. I just turned that back off and will start taking dividends again to augment spending needs.

I'm constantly adjusting my approach based on life's cards that are dealt.

Similar here. Just remember that cash is as useful as Roth to live off until Medicare kicks in while lowering your MAGI.
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