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Old 03-01-2021, 10:25 AM   #41
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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.
What a very sweet position to be in. Well done!
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Old 03-01-2021, 10:37 AM   #42
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The day I retired, I had enough cash to cover spending for a little over 4 years. That was back in 2009, and the market looked dismal so I probably had more in cash than I otherwise would have had.

By now (2021), I have a little more than 6 years' cash. This is because I am pushing 73 years old. While I am reasonably healthy, I am also thinking that my projected lifespan is lessening (due to being older). So my cash will not be subject to being decreased in value by inflation for as many years as previously.
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Old 03-01-2021, 11:51 AM   #43
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We don't hold much cash. Typically, between 1-3% of the portfolio. That's equivalent to 6-18 months of expenses, not covered by pensions and dividends.

I started ER holding more like 5-6% and then replenished it by selling stock almost immediately after drawing some cash. After thinking about that, I started questioning the conventional wisdom of holding that much cash, since it didn't seem to serve any real purpose.

What I do now is: wait for cash to get down to 1%, then replenish to 3%. That happens roughly every 18 months or so. I try to be somewhat opportunistic about timing, in terms of both taxes and market considerations.

All that said, we sold our last rental house late last year and we're still sitting on the cash. We plan to use most of it to buy a Class B camper van. The rest will either get consumed over time or put into the market if I sense a good opportunity.
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Old 03-01-2021, 12:39 PM   #44
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We donít have pensions or other income, so I retired end of 2017 with about 4 years of cash. The dramatic stock market correction in Feb/Mar 2020 made me glad I had such a large cash cushion, although I had no idea the market would recover so fast. Having the large cash reserve helped me to stay the course, I think.
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Old 03-01-2021, 12:49 PM   #45
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We donít have pensions or other income, so I retired end of 2017 with about 4 years of cash. The dramatic stock market correction in Feb/Mar 2020 made me glad I had such a large cash cushion, although I had no idea the market would recover so fast. Having the large cash reserve helped me to stay the course, I think.
Did you have any bonds? They did ok during the corona crash.
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Old 03-01-2021, 12:58 PM   #46
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Having the large cash reserve helped me to stay the course, I think.
That's a great point. If it kept you from making a knee-jerk reaction that you would have regretted later, it was well worth it. I can totally see how having that cash on hand would have that effect.
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Old 03-01-2021, 01:16 PM   #47
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We don’t have pensions or other income, so I retired end of 2017 with about 4 years of cash. The dramatic stock market correction in Feb/Mar 2020 made me glad I had such a large cash cushion, although I had no idea the market would recover so fast. Having the large cash reserve helped me to stay the course, I think.

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That's a great point. If it kept you from making a knee-jerk reaction that you would have regretted later, it was well worth it. I can totally see how having that cash on hand would have that effect.
Having enough cash on hand to ride out several down years is what saved my bacon during the 08/09 crash and allowed me to stay the course. Now I never leave home without it.
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Old 03-01-2021, 01:43 PM   #48
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Having a target AA and rebalancing to it routinely is different from saying this is my current AA.
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Old 03-01-2021, 01:45 PM   #49
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Having a target AA and rebalancing to it routinely is different from saying this is my current AA.
Agree. But why not include cash in the estimation of your current AA?
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Old 03-01-2021, 01:47 PM   #50
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Agree. But why not include cash in the estimation of your current AA?
Current AA at any instant in time is not important to me. Only the AA of the retirement portfolio that I withdraw from for retirement income and rebalance annually.
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Old 03-01-2021, 01:48 PM   #51
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Current AA at any instant in time is not important to me. Only the AA of the retirement investments that I withdraw from for retirement income and rebalance annually.
You said earlier you do not include your cash in your AA. Why not?

The reason I am trying to get an answer is important to me. If I include my cash, I will be 50/50. If I do not, I am 60/40. I don't think I should rebalance my non cash assets back to 50/50 as that will put me at 43/57.
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Old 03-01-2021, 01:55 PM   #52
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why not include cash in the estimation of your current AA?
Personally I do... If I didn't include cash in my AA, I wouldn't have an AA most of the time
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Old 03-01-2021, 01:55 PM   #53
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You said earlier you do not include your cash in your AA. Why not?
I manage my long term investments retirement portfolio as a stand alone piece. I withdraw from it annually for income and rebalance it auto a target AA after withdrawing. I actually do have cash in my retirement portfolio as part of the retirement AA. We also have HSAs and short-term accounts including checking that are not part of our retirement portfolio.

I only pay attention to the AA of my retirement portfolio because that’s only piece that I rebalance or withdraw from according to the withdrawal rules I use.

This is simply a personal choice, and works well for us.
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Old 03-01-2021, 01:57 PM   #54
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Did you have any bonds? They did ok during the corona crash.


I did have about 7 years worth of bonds, and it did help buoy my portfolio decline during the market correction.
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Old 03-01-2021, 01:57 PM   #55
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If I didn't include cash in my AA, I wouldn't have an AA most of the time
Why are you all cash?
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Old 03-01-2021, 01:59 PM   #56
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I manage my long term investments retirement portfolio as a stand alone piece. I withdraw from it annually for income and rebalance it auto a target AA after withdrawing. I actually do have cash in my retirement portfolio as part of the retirement AA. We also have HSAs and short-term accounts including checking that are not part of our retirement portfolio.

I only pay attention to the AA of my retirement portfolio because thatís only piece that I rebalance or withdraw from according to the withdrawal rules I use.

This is simply a personal choice, and works well for us.
That makes sense. I like this approach and I may end up targeting 60/40 instead of 50/50 for the retirement portfolio.
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Old 03-01-2021, 02:02 PM   #57
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Why are you all cash?
Personal choice..... Why risk it since I've got more than enough for my lifetime....


A.K.A. "won the game".
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Old 03-01-2021, 02:06 PM   #58
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At this point in life, I essentially count all of our money as retirement money regardless of which account it is in or what type of assets it comprises, so cash is part of my AA. And in retirement, I would definitely rebalance to keep the cash accounts at a certain level. I think most retirees probably do that, aiming perhaps to keep one-year of expenses in cash, and as that cash gets spent, drawing from the investments to replenish it.


I've always looked at our entire portfolio as one big bucket and structured it accordingly to maintain the AA that I wanted.
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Old 03-01-2021, 02:14 PM   #59
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Personal choice..... Why risk it since I've got more than enough for my lifetime....


A.K.A. "won the game".
Makes sense. I have won the game @ 2% real return, but my model kindof explodes if I put in -2% real return.
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Old 03-01-2021, 02:33 PM   #60
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At this point in life, I essentially count all of our money as retirement money regardless of which account it is in or what type of assets it comprises, so cash is part of my AA. And in retirement, I would definitely rebalance to keep the cash accounts at a certain level. I think most retirees probably do that, aiming perhaps to keep one-year of expenses in cash, and as that cash gets spent, drawing from the investments to replenish it.


I've always looked at our entire portfolio as one big bucket and structured it accordingly to maintain the AA that I wanted.
You will eventually notice here that there are a wide variety of approaches to cash flow management and not really one particular approach that “most retirees” use.
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