No. of Recommendations: 5
Keeping a few years of living expenses in excess of SS in cash isn't a bad idea, at least in my opinion.

- Cash doesn't earn anything, so a significant amount is a big drag on your overall portfolio performance.
- Worse yet, cash *loses* 2%-3% a year due to inflation.
- How big is "a few years of living expenses"? $30K/yr * 5 years = $150K. For that to be only 10% of your portfolio, then your portfolio is $1.5 million.
- How long is "a few years"? 3? 5? 7? What happens when your 5 years of cash is exhausted and you have to sell stocks. Now you're deep in a bear market and your allocation is 100% equity and 0% cash.

"In the end, the reality is that while cash reserve strategies appear psychologically appealing, their actual benefits as an enhancement for retirement income sustainability appear to be a mirage upon closer inspection. ... the benefits are overwhelmed by the adverse consequences of a large allocation of cash in the portfolio that drags down long-term returns."

" if you're pulling withdrawals from the cash reserve during a declining market, you're making a tactical decision to reallocate toward riskier assets."
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