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Old 02-28-2021, 08:04 PM   #21
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Weĺl be long on cash, but the reasoning is this:
The time for BTD travel is when we are younger. I want to have that money ready to go.
We are also looking hard at a new home/relocating at retirement. It will probably be a self build, and financing raw land is often difficult.
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Old 02-28-2021, 08:05 PM   #22
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Any cash I have is just part of my 50/50 AA. My 401k holds a large majority of my fixed income allocation in the form of a stable value fund paying 2.2%. Our Roth accounts are 100% equity. So I use my taxable account to maintain the 50/50 AA. I have a giant severance package coming, so I will invest that in my taxable account to maintain the 50/50 AA. That will leave me with about $300k in cash that I can invest in bonds or just leave as cash. It's about 3 years of expenses, so I'll probably just leave it as cash.

I think it's important to decide if your cash is part of your overall AA. I think it is.
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Old 02-28-2021, 08:16 PM   #23
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The definition of cash makes answers different. Many people would consider fixed income as a part of asset allocation.
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Old 02-28-2021, 09:04 PM   #24
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If it's extra cash that you set aside to spend in the first few years of retirement, then it's not part of your long term retirement investments. You aren't going to rebalance it as you would an AA, or withdraw X% a year from it. It's there to spend right away.

If it's an extra cash buffer that you are going to leave in place indefinitely, then it makes sense to consider it part of your AA as it will figure into your rebalancing and annual withdrawal.
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Old 03-01-2021, 12:29 AM   #25
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In 2020, I went on one last vacation, and was ready to ER when we returned in March. I had three year's cash equivalent, but the remainder of our investments had just lost 30%, making the purchase of a new home unachievable. Now that we've bought our new place, deferred ER about 10 months, and the markets have recovered, we once again have about 3 years of living expenses in money market and bond funds. Helps me sleep at night, and helps me have the confidence to give notice, and actually RE, in 5 days. Without this year's spending equivalent in cash, I'd be hesitant to pull the plug, given the relatively high valuations, and recent volatility.
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Old 03-01-2021, 01:22 AM   #26
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I just retired 1-Feb-21

We have 2 years of Cash sat in the Bank and Gun Safe for FAT FIRE expenses and can easy go to 3 years if need be.

The "Sleep Good At Night Factor" is real.

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Old 03-01-2021, 04:08 AM   #27
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I didn't have any excess cash. What I had was over $150k worth of stock in a brokerage account that I would sell as needed. I also had over $70k in a 401k retirement account that I could access early using the "rule of 55". I prefer to keep my money working for me as much as possible so I don't keep much cash. I did recently set up monthly withdrawals from my 401k so I don't have to sell the individual stock because I'm getting a better rate of return on it. I was comfortable with that. I could live over 15 years on those 2 accounts alone. The rest of my accounts will pretty much grow untouched for many years, barring any unforeseen circumstances of course.
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Old 03-01-2021, 04:53 AM   #28
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I'm not retired yet, and I wrestle with how much cash to have when I walk away in 2 yrs.
When people say they have x # of years of cash, do you calculate that as necessary living expenses, not including planned discretionary spending or total planned spending? To me cash would be cash and not part of my AA nor invested win anything other than money market , otherwise it's part of your AA. I have a large cash value life insurance amount that I can always tap for needed expenses , but is that cash? I personally don't love the lack of growth concept and since I am an income investor it bothers me to not have that money working and creating income. Argghhh ...driving myself crazy again.
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Old 03-01-2021, 04:54 AM   #29
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I just retired 1-Feb-21

We have 2 years of Cash sat in the Bank and Gun Safe for FAT FIRE expenses and can easy go to 3 years if need be.

The "Sleep Good At Night Factor" is real.

gamboolman...
BTW - Congrats on your FAT FIRE!
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Old 03-01-2021, 05:07 AM   #30
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Looking back over the last 5 years it looks like we keep about 100k in cash outside of retirement accounts. I keep 2 sets of books. One for total assets and one for core retirement. The core retirement includes tIRA's, Roth's and one of our HSA's for long term growth. DW manages (spends) out of the first category and I manage (cling to) the core retirement accounts.
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Old 03-01-2021, 07:14 AM   #31
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I don’t understand why people do not consider cash as part of their asset allocation.
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Old 03-01-2021, 07:35 AM   #32
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We had 5 or 6 years of expenses in short term bonds and cash. I believe SORR should be considered and mitigated where possible.
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Old 03-01-2021, 07:41 AM   #33
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The whole nine yards... (less physical assets) No equities, no bonds... To be fair, several million was tied up in IRA's and 401'ks but that too was in cash or fixed income.

From my POV, I probably would not have retired when I did if I had to keep money in the market to meet my retirement numbers.... These days I do play the market but not with any money I need to maintain my retirement lifestyle.
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Old 03-01-2021, 07:43 AM   #34
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We have enough in stable value and CDís to last until SS and pensions arrive in our mid sixties. Our invested portfolio is 100% stocks and is purely discretionary/blow the dough money.
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Old 03-01-2021, 08:04 AM   #35
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Have about 5 years worth of annual expenses in cash to make up for an otherwise stock heavy portfolio.
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Old 03-01-2021, 09:17 AM   #36
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Without this year's spending equivalent in cash, I'd be hesitant to pull the plug, given the relatively high valuations, and recent volatility.
I feel like 12 months of spending in cash is the bare minimum I'd be comfortable with entering retirement. Those first few months adjusting to no paycheck for the first time ever I'd want a nice pile of cash to draw from just in case other pieces of the plan don't play out exactly as anticipated.
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Old 03-01-2021, 10:01 AM   #37
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I donít understand why people do not consider cash as part of their asset allocation.


Neither do I. The only exclusion for me is current yr expenses.
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Old 03-01-2021, 10:04 AM   #38
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We originally had about $200K in cash (2 years worth of expected expenses in retirement (~$100K per year)) when we initially retired in 2017.
As time has worn on however I have reduced that to a floating value between $50K to $100K, depending upon what we have going on etc. and haven't had any issues occur.
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Old 03-01-2021, 10:06 AM   #39
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I donít understand why people do not consider cash as part of their asset allocation.
Me neither. If you have a substantial amount in cash (not just a little emergency stash), it is part of your AA. You can't really say you're 80/20 or 60/40 when 5 or 10% of your money is actually in cash.


Right now, we're about 67/23/10.
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Old 03-01-2021, 10:15 AM   #40
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I have always maintained a lot of cash equivalents as part of my AA, because I own very little bonds. These include stable value funds, I bonds, and very short-term T bills.

At the start of my retirement, the 25% cash AA could last me 10 years. With the portfolio growth, my current 30% cash AA can sustain my current WR for 30 years (ignoring inflation). And I still have SS to claim at the age of 70.

PS. Much of the cash above is in before-tax accounts, so I cannot withdraw to buy another home on a whim without serious tax liabilities. However, I have enough after-tax cash to last quite a few years.
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