As you approach retirement, having a solid cash cushion isn’t just a smart move—it’s a vital layer of protection for your future plans. I often recommend keeping at least six months’ worth of income in easily accessible cash. This buffer can help you weather unexpected expenses, whether that’s a sudden health bill, urgent home repair, or the impact of inflation or market downturns, without forcing you to make uncomfortable changes to your carefully built financial strategy. Some experts even suggest building up to a year’s worth of essential expenses for extra flexibility and peace of mind. The key is to keep these reserves liquid and safe—think savings accounts, money market funds, or short-term GICs—so you’re not tempted by higher yields that might put your principal at risk. For those in the final five years before retirement, I recommend separating this cash from your day-to-day accounts, reviewing it annually, and using it strategically to avoid selling investments during stressful times. It’s all about making your transition into retirement as smooth and stress-free as possible—one thoughtful step at a time.
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