You say the life expectancy of 90 is generous based on family history, I'll add that it is doubly generous based on your health issues as well. So if he FIRE calcs say you are good to 90, I might even push the cash out to 5 years, not 3. You are 42 so maybe you weren't treated to the dot com crash which basically lasted 3 years before it got better (and even longer if you're talking about real returns). You only experiences the relatively shorter financial crisis and COVID crash, with quick rebounds. Market downturns can last awhile, so 5 years is the safe zone for meSome say to save 3 yrs worth of cash to stomach market downturns so you don't have to sell shares at a loss. Does this make sense? What if you hold some muni funds in your brokerage, which you could sell during a downturn without much in terms of realized losses?
I'm 42, and due to health issues I'm coming to terms with the reality that I might not work full-time again. Single, no children, no debt, renter. Reside in NY so pay state and city taxes. Portfolio is $2.85M, $2M is in my brokerage and the rest is pretty evenly split between Roth IRA and 401k. 72/28 target AA. Current AA is closer to 75/25. I use +-5 bands for rebalancing. Currently holding $78k in cash.
Annual expenses are very low especially in the city where I live. About $27k. Annual income projection based on current situation is $65K (I receive Social Security Disability Income and dividends from my investments). I've run projections using various FIRE calcs and always come out in good shape with a life expectancy of 90, which is probably being generous given my family history.
One reason I'm asking about the cash reserves now is that I have about $10k in my Vanguard money market from dividend payouts since early May and I'm trying to decide if I should reinvest it in my brokerage or move it to one of my high yield savings accounts.
Portfolio breakdown:
401kFidelity US Bond Index $345,347.83
401kFidelity 500 Index$35,043.34
BrokerageVFWAX$173,577.55
BrokerageVMLUX$88,524.71
BrokerageVNYUX$223,269.85
BrokerageVTIAX$46,101.01
BrokerageVTSAX$1,460,939.16
Brokerage Money Market $10,000
Roth IRAIXUS $40,739.34
Roth IRAVFIAX$92,153.23
Roth IRAVTIAX$21,404.91
Roth IRAVTSAX$200,790.11
iBonds $25,000.00
Treasury Bonds$2,000.00
Online Savings #1$60,682.63
Online Savings #2$15,000.00
Checking $2,556.73
HSAFidelity 500 Index$4,252.45
Total$2,847,383
Statistics: Posted by yules — Fri Aug 02, 2024 1:50 pm — Replies 1 — Views 70