How much Cash did you have upon retiring or planning to have -2x-3x yearly expenses?

[cyber888]

So, I'm planning to retire in 1 - 2 years. I'm interested to know how much Cash buffer you had (if you retired) or are planning to have (if you are planning to retire in the next 1-3 years).

Will you carry cash equivalent to 1 year of expenses, 2 years of expenses, 3, 4, 5 years of expenses. I've read several here says 2 - 3 years of expenses. And the reason is:

(1) To ride out any market downturn or crash, so you won't touch your equities
(2) Because you're still 3 - 8 years away from getting Social Security
(3) Just to feel safe and secure - that you can sleep at night.

 

[TheWizard]

I'm in year nine of retirement.
I've never held significant cash.
For past several years, I've been targeting around $10k in my checking account after bills are paid for the month.
Sometimes after large travel expenses get paid, it'll be less than $10k for a while.

Excess retirement income beyond that level gets invested in stock funds in my taxable account...

 

[RetireBy90]

I had 3-4 years in CDs as a buffer, but never used them. Still have about the same but we are spending more so now it is only about 2-3 years. Then we also have another 7% in cash in various fidelity accounts or over 10%, just to ease any anxiety from market moves.

 

[Montecfo]

I do not personally advise holding large sums of cash as risk mitigation, due to low yield. That is what your bonds are for.

Having as said that, I answered 3 years since I had 3-4 years in cash/CDs as bond proxy upon retirement. I presently carry about 2 years worth of cash/CDs under same premise.

 

[RobbieB]

I keep 1-2 years in cash (low interest checking-savings cash) and 5 years in muni bonds.

 

[NW-Bound]

I have way more than 5 years of expenses in cash, because I hold very little bonds and use cash for my AA. And my WR is way low.

My cash yield is not bad, because I write cash-covered puts against it. I feel a lot more comfortable doing that than holding bonds.

 

[Dash man]

We have about five years in easy access cash earning an average of 2.3%, and another couple of years in a 3-7 year bond ladder. We have plenty in stocks too.
My biggest worry is the possibility of another 70’s period of stagflation.

 

[RetireAge50]

Currently 11 years in cash. This is enough to fill the gap until we get social security and pensions.

The weighted average return on this cash is 2.47%. We have no bonds. Portfolio is 75% stocks and 25% cash.

 

[N02L84ER]

When DH retired, we had 3.5 years of cash. Three years later, we were down to a half year of cash and were in the middle of the Great Recession. Luckily, I was still working part time and was able to increase my hours. We now have one year of cash on hand and a much higher investment balance.

 

[steelyman]

I have two years of “target income” (for me, 85% of final gross salary, adjusted for 3% annual inflation) set aside. It’s split between a muni money market, stable value and I bonds.

 

[Luvtoride]

We have our 1st 3 years of additional cash needs upon retirement in a 3 year MYGA @3%.
Additional future cash needs for years 4-10 in a Buffered annuity with downside protection and no upside limit to S&P 500 index (this will not be annuitized). This allows us to be more aggressive with our “later bucket” in a diversified 75/25 portfolio. Feel very comfortable with this allocation.

 

[Dog]

We have been retired for 5 years and have about six years in cash (CD ladder and MM fund). This is about 10% of our portfolio. It allows us to sleep at night.

 

[SecondCor521]

I didn't have any particular amount in cash, in the sense that the amount of cash I had was not the result of some percentage of asset allocation, nor was it the result of some multiple of my years of expenses. None of the three reasons listed in the OP apply to me or my plan.

I just had what I had in cash. It turns out it was somewhere between one and two years of spending. I think what happened was I knew I was going to be FIREing soon, so I knew I was going to be spending money from my stash soon, so the last little while before retiring I just routed my paycheck into my savings account and it just piled up there.

After FIREing, I started spending down this cash first. My Mom died a few months after I retired, and so I also got about another year's worth of expenses in life insurance proceeds a few months after that. That went into the pile and got spent down with the rest of the cash.

Nowadays I keep everything invested and just "sip" from my taxable investments by topping off as needed. I usually sell enough to where my cash position is about three months of expenses, and then just go about my business until I need more.

Right now I have essentially a negative cash position - I've got my credit card bill due on the 17th and that payment in full is more than I have in my checking plus savings account. Sometime Monday or Tuesday I'll do my sale and get back to that three month position.

My cash is just in an online savings account earning about 0.5%. I've never liked CDs or MYGAs.

I do have some bonds in my traditional IRA, but I don't think that's what OP is interested in when they say "cash". But maybe I'm wrong about that.

 

[ncbill]

I prefer this approach to mitigate SORR (scroll down to the "cash bucket" section):

https://earlyretirementnow.com/2018...hdrawal-rates-part-25-more-flexibility-myths/

Note it is in addition to your regular portfolio & is never refilled:

"...we only withdraw from that cash cushion if the investment portfolio goes more than 20% underwater.

Once the cash cushion is exhausted we tap the investment portfolio and we never replenish the cash account again."

 

[CyclingInvestor]

Retired 15 years ago at 48. Had a couple months expenses in cash, same as today, with all the rest in equities. As I have lived off the dividends, I saw no need for a cash cushion yielding almost nothing. No problems so far.

 

[jollystomper]

I went into retirement with about 5 years of cash to cover expenses. Actually, to cover expenses (including taxes) beyond what my non-COLA pension would cover, about 40% of total expenses. I was 60, and all three of the reasons in the original thread were part of my decision.

With 3 years of retirement gone, my current cash is now forecast to cover around 8 years of expenses. A first world "problem" to deal with .

 

[chassis]

My view is a reasonably large (3 years of expenses) in cash and an aggressive equity allocation. Similar to Montecfo's bond analogy, I view cash as a portfolio volatility reducer or ballast.

I plan to hold zero bonds if the current environment, or anything like it, continues.

 

[CardsFan]

Currently 11 years in cash. This is enough to fill the gap until we get social security and pensions.

The weighted average return on this cash is 2.47%. We have no bonds. Portfolio is 75% stocks and 25% cash.

Curious how you are getting 2.47% yield on cash. Are you talking CD's?

 

[Trailwalker]

Three years in cash. I don't know if it's the right amount, but I sleep well at night.

 

[ocean view]

We’re in year six of retirement. Each January when we rebalance we refill our cash bucket for 2 years expenses. This amount does not take into account any income we will receive in the coming year from our taxable account or the HSA balance we could tap. So considering those, we probably have 2.5+ years of cash.

 

[MRG]

I was pretty nervous when I retired 8 years ago and we had 5 years in cds that have since been spent or recycled the last time. Last one expired in May and I have been playing cash covered puts and CCs to generate more income. We have a couple years in short term bonds, a MYGA for a couple years and quit reinvesting dividends. I sleep well. Especially with 5 years to max SS.

 

[brett]

We moved away from keeping much cash on hand in our HISA accounts.

The current interest rates and the current inflation rates meant that we were loosing buying power every year on this money.

Instead, if we need replenishment we will draw down on our income based equities.

We only use cash drawdowns to subsidize our pension income. During covid our pensions easily cover more than our living expenses.

 

[Ronstar]

I'm at year 7.5 and have used cash the whole way. Probably have enough cash for 5 more years since we just sold our snowbird condo and converted proceeds to cash.

That said, maybe I should start drawing from the IRA and keep the cash for a new house.

 

[street]

My plan is an unorthodox way. My cash will take me 30 plus years of expenses. From cash stash we have given away 6 figures, bought vehicle, bought land and buy everything that is needed for life. My plan was to have enough cash to live on and to not have to touch investments. The plan was to be a safe and secure for sustaining my portfolio through down times. The ways it looks 5 years into ER my plan of sustainability of investment should work well. My cash is ~11% of portfolio not of NW, and the percentage (cash) keeps going down because investments keep going up.

I will add also, that I have a low WR and take SS.

 

[calmloki]

We are about 28% cash accounts/CDs, a bit more than that in property contracts and short term property loans, about the same in rental property that will go on the market, and probably the lowest percentage in stocks/bonds. We don't manage to spend the rental income now. Probably not the most efficient or smartest use of our money, but it allows us funds to take advantage of opportunities and it really doesn't have to be optimal for it to all work out.