It's always imperative to hold aside a cash reserve - which varies based on your age, circumstances, and personal mental well-being. For those in retirement, it's fine to set aside 1-3 years of cash needs across money markets, a ladder of Treasuries/CDs, short duration bond funds, cash, etc. This way if the economy/market nosedives, you have a safety net for your spending needs. The importance is striking the right balance between short-term funding needs and longer-term goals. As an extreme example, problems arise around asset longevity when you are holding in excess of 35-40% of your portfolio in cash. Hope that helps.
Blake, What if you are going into your 70's and we can't afford a 20% correction that takes years to recover.
It's always imperative to hold aside a cash reserve - which varies based on your age, circumstances, and personal mental well-being. For those in retirement, it's fine to set aside 1-3 years of cash needs across money markets, a ladder of Treasuries/CDs, short duration bond funds, cash, etc. This way if the economy/market nosedives, you have a safety net for your spending needs. The importance is striking the right balance between short-term funding needs and longer-term goals. As an extreme example, problems arise around asset longevity when you are holding in excess of 35-40% of your portfolio in cash. Hope that helps.