I started down this path with the idea that having 2 years worth of cash as a buffer from a bear market is enough.

You see, when you are planning to withdraw your wealth to spend down, you start researching on what are the ingredients of a plan that:

  1. Creates an annual wealth cash flow to pay for your expenses
  2. Is sustainable over long period
  3. Lasts for a long period that you will not earn much
  4. Takes care of different probable market cycles or conditions
  5. Filled with events that are within your control, not within your control, you know and you do not know

In a lot of the articles that I read about, one of the advice that was often given is that, to mitigate the issue of sequence of returns risk is to have a 2-5 years of cash holding.

Negative Sequence of Return Risk and why a …