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:
- Creates an annual wealth cash flow to pay for your expenses
- Is sustainable over long period
- Lasts for a long period that you will not earn much
- Takes care of different probable market cycles or conditions
- 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.