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Old 09-29-2009, 07:01 PM   #21
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I'm still working, but I have about a year of expenses in a MM and checking account. Beyond this, I would have to start selling stuff or drastically revise my spending habits.
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Old 09-29-2009, 07:09 PM   #22
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Keep in mind too, that your portfolio throws off income. If someone says they have "X" years expenses in cash, they probably have a lot more than that in reality. Right now a 60/40 portfolio made up of the S&P 500 and Bond Index throws off 2.6% in income. If you spend that income (as you should in retirement) then a 2 year cash balance lasts about 5 years (not adjusting for inflation) if you're taking a 4% WR.

And if you have investments that throw off enough capital gains to keep in you one of the top tax brackets, it doesn't sound like you'll need much cash on hand at all . . . as long as those cap gains are dependable.
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