How much cash should I keep in retirement?

While the right amount of cash savings depends on guaranteed income sources, spending patterns, and risk tolerance, in general, retirees should consider keeping 12–24 months of essential living expenses in cash. You should have enough cash available to cover emergencies and to avoid forced selling in down markets, but not so much that inflation erodes long-term purchasing power. 

A few things to consider are:

• Income sources: Predictable, guaranteed income (Social Security, pension, annuity) means you may need a smaller cash reserve.
• Spending patterns: If you have highly variable discretionary spending (such as on travel or hobbies), you may consider a larger buffer.
• Risk tolerance: Anyone prone to anxiety in market downturns may benefit from the psychological comfort of a visible cash reserve.

A financial advisor can work with you to determine the appropriate amount of cash you should keep on hand for your specific circumstances.