How many years of expenses in cash at retirement?

[Brat]

I too have 5 years withdrawals in cash equivalents (MM/CDs) and I-bonds.

Another maybe 10 years in two balanced funds with Forbes' B or better rating for both up and down markets.

 

[tryan]

$0 cash ... weelll the checking account had SOMETHING in it ... but not much 8).

A severence package and unemployment was 1 years expenses. Then the rental cash flow carried the bulk of the weight. Oh, I threw $450k of HELOCs on some property as a safety net.

I like to keep it ALL working.

 

[Poundkey]

I've got about 5 years in cash right now. A portion of "bucket 2" is in Total Bond Market and there are several more years there if the need should arise. I've got no pension to look forward to (blue collar worker) and feel the need to carry this much cash or near cash to bridge me to SS. I'm 58 and retired last March, DW 56 and also retired. Everything we have is home grown. I really envy those with pensions.

Will probably let cash drop to 3 years after SS kicks in, then hold it at 1 to 3 years after that.

 

[JohnEyles]

I retired last year at 48. I keep about 2% in cash, 98% stocks. I do not feel I
need a large cash reserve since I am living on dividends.

But is it not true that in a bad bear market that dividends will tend to shrink also ?

I guess I have about 7 years in cash, laddered into T'Bills and PCFU 6.25% CDs
of varying maturities. But that's only the cash necessary to supplement
my dividends and a couple small annuities.

The answer may depend on what ROR you're getting on your cash. More than half of
my cash is in PCFU 6.25% CDs. That's as good a return as one migth expect from
a bond portfolio (no ?) so I feel pretty good about having that much in "cash".

 

[mickeyd]

I agree with previous comments that this is an interesting topic. Thanks for bringing it up.

We have about 12 months in what I call our "contingency fund" (CF). This used to be our "emergency fund" but I'm semi-retired and DW is a few months away from retiring, so all of our future cash will be included in this fund and contingency fits better than emergency. The CF consists of a PMMF @ Vanguard, checking account and the cash value of some old LI policies that are no longer needed.

I pulled the trigger on one of my DB pensions a few years ago and that goes into the CF each month. DW will pull the trigger on her pension in the summer of 2007.

The LI policies will be cashed in before the end of 2008.

In 2009 I will pull the trigger on my other DB pension.

2010 is the year that DW and I will pull the trigger on our SS benefits.

All of these income streams will be dumped into our CF as I have scheduled them. This should give us an income close to 100% of our expected expenses.

By 2014 I will have to begin RMD that will dump even more money into my CF. I will direct RMD money into our CF. RMD for DW starts in 2018.

Bottom line, if it all works out as I have planned (which it seldom does), we will be taking a lot of vacations just to make sure that the majority of our stash doesn't go to the kids. (We have told the kids to not expect much of an inheritance.)

Now all we have to do is live for another 40 years!

 

[CyclingInvestor]

But is it not true that in a bad bear market that dividends will tend to shrink also ?

Generally not. Dividends from well-run companies were pretty much
unscathed in all recent bear markets. The last time they were really
impacted was in the 29-33 Depression. SInce I can easily live on half
my current dividend flow, I am not too worried.