Being retired for 14 years, with most monthly income from the IRA, I've always tried to maintain at least one year to eighteen month's cash to avoid having to sell equities into a bad market. This has been backed up with another year of government securities (US Bonds, many paying 4-6%), plus various readily-convertible assets, creating a 3 year 'cushion.'
Recently I dumped a mediocre bond fund (FMSFX), upping the reserve to 5 years. Presently this is about 8% of portfolio). Some of that I am putting back into the market in international/emerging markets (OAKIX mainly). The question is; what are other retirees doing in this regard? What is your opinion on the cash a prudent retiree should carry?
None. That's my opinion.
Multi-year cash reserves are a waste of resources.
Typical investment portfolios have plenty of liquidity.
I keep 3 years of living expenses (amount i need at minimum when combined with ssn and annuity) available in liquid form. I like to be at 60 40 stock, fixed income, but am currently holding cash from taking gains, and pondering where to reinvest, as prices are still pretty high. Age 70, retired since 2010.
Yeah, I think it depends.
If you have income from other sources like SSN, Pensions, Real estate income(rentals/business), I think you can carry less cash.
If you are fully funding your retirement from accumulated assets, a different perspective would apply.
The most recent seminar I attended specified a 4 bucket approach but it's based on those variables I mentioned.
I'll be following up with that Planner next week to get a more individualized answer for myself.
As always, I think you could do the same exercise to get a better answer for yourself.
I keep less than 1% in cash in a 98% equity portfolio and each year I look at what I made vs what I would have in a more traditional 60/40 mix. When I need extra money beyond SS and pension I sell something and my brokerage company has the money for me in 3 days. As far as not wanting to sell in a down market I would rather look at how much more money is in my account and not worry about current market conditions.
Retired 6 years ago and keep ~3 months in cash. The rest is fully invested. Since I keep away from Closed-end funds and liquid items except for special cases. Never a problem by collecting dividends and interest into the cash pot so selling equities to refill is not a problem.