How much in cash?

[bigla]

How much cash?

I retired 4 years ago at 55. We have 3-4 years in cash which I have acculmulated by taking profits from my 60/40 portfolio. We use a portion of that to supplement our pensions each year. I will periodically take some profit off the table and stiill keep our portfolio at a certain level. By doing this we avoid withdrawing when the market might be down.
Downsizing our expenses has proven to be very hard. We live in SC, I have an ill dad in a nursing home in Fl, my first grandchild in Oregon, and my son who is about to get married in NYC. We do a lot of traveling to them and to far off places (that was our primary retirement wish as we couldn't when we were working our butts off to retire early). If push comes to shove we would do cut expenses but thankfully that has not happened yet.
Larry

 

[ashtondav]

I maintain a relatively small amount of cash and inflation indexed bonds to top up my dividend income. It works as follows:

Pension + dividend income = good standard of living (pension is inflation linked)

If dividend income does not rise in line with average earnings or inflation (whichever is the higher) I sell some of the bonds or cash to make up the shortfall. In 7 years i've had to dip into the cash in 3 years (but it hasn't required much to make up the shortfall).

 

[WilliamG]

Why are some people so worried about cashing out of an intermediate bond fund if it is really necessary. Seems a bad year for a bond fund might be around -5% (less if short term bond fund). If you are cashing out 4% of your assets from this bond fund then the "permanent loss" amounts to only 0.2% of total assets. Not an ideal situation but hardly something to loose sleep over.

Very good point. Earlier this year Vanguard did an investment plan for us. I had seen earlier plans where they sliced and diced fixed income portion with long term, short term and even high yield bonds. In mine they put it all in their Total Bond Market which is effectively an intermediate term fund!