How Much Cash Cushion for Retirement in 2025?

The sneaky cost you don’t see: forced selling

You can beat the expense ratio, you can bargain down the advisory fee… and still blow up your plan if you have to sell stocks after a drop just to pay this month’s bills. That’s the cost nobody sees coming. It’s called sequence-of-returns risk, and in 2025 it still matters because markets are jumpy, headlines yank sentiment around, and the price you get on the day you sell is the price that sticks on your statement, forever.

Here’s the shape of the problem. Average returns can be fine over 30 years, but if your first few years of retirement are poor, withdrawals compound the damage. We’ve watched that movie before. The S&P 500 fell about 34% in just 33 trading days in Feb-Mar 2020 (peak-to-trough during the COVID shock). In 2022, the index’s drawdown ran near 25% while core bonds (U.S. Agg) posted a calendar-year loss around 13%, a nasty combo when you’re counting on diversification to bail you out. Go back further and you’ve got 2007-09 with a roughly 57% peak-to-trough slide. If you were forced to sell in those windows to fund spending, your “annualized return” became academic.

And the structure of markets right now doesn’t make this a 2017-style snoozefest. Equity leadership is concentrated, which tends to push day-to-day swings in both directions. By late 2024, the top 10 companies were over one-third of the S&P 500’s weight, and that concentration is still elevated this year. Add rate-cut timing debates and CPI surprises and, yeah, you’ve got a backdrop where a bad week can show up right before your property-tax draft hits.

What you’ll get from this section: a plain-English read on sequence risk, why holding cash is less about maximizing return and more like buying “bad-timing insurance,” and a simple way to size a cash buffer so you aren’t a forced seller after a 20% wobble or the week your roof starts leaking.

Cash isn’t a hot asset; it’s a shock absorber. You hold it so your future self doesn’t have to sell good assets at bad prices.

Quick story from the trenches: I had a client in early 2009 who had to raise three months of living costs during the downturn because his “cash bucket” was basically a checking account with two weeks’ expenses. The sale itself was small, the regret was massive, he locked in losses right before a multi-year rebound. We adjusted the plan to include a bigger cash sleeve and, not kidding, his blood pressure readings improved.

And yes, holding extra cash has an “opportunity cost.” I’m not pretending it doesn’t. But opportunity cost beats permanent loss from selling into a hole. Think of cash like insurance: you pay a small premium (you might earn a bit less than a risk asset) to avoid a catastrophic timing error. That trade is usually worth it when withdrawals are mandatory and psychological bandwidth is finite. If this sounds complex, it kind of is; markets don’t line up neatly with your utility bills.

• Sequence risk is real: even with the same 30-year average return, early bad years can sink outcomes.
• Cash breaks the chain: it prevents selling stocks or long bonds into weakness to meet spending.
• Treat cash as insurance: it’s there to absorb shocks, not to “win” a performance derby.

In a minute I’ll show a practical way to translate your monthly spend into a cash cushion range and how to refill it after drawdowns without playing hero-ball in choppy markets. No silver bullets here, just a system that cuts the sneaky cost you don’t see.

So, how much cash? A flexible rule that actually works

I don’t love one-size-fits-all dollar targets because they ignore what actually matters: your spending coverage. Think in months of net essential expenses after guaranteed income shows up. That’s your baseline. If your core budget is $7,000 a month and Social Security plus a tiny pension covers $4,500, your net essential is $2,500. The question isn’t “Do I hold $100k or $300k?” It’s “How many months of $2,500 do I want in true cash equivalents?” That framing scales with real life.

Baseline range I use with clients:

• 12-24 months of net essential expenses after Social Security/pensions/rents. That’s your floor and ceiling most of the time.
• New retirees (first 5 years): lean heavier, ~18-24 months. That early window is where sequence risk bites hardest.
• Veterans with big pensions/annuities or steady part-time income: 6-12 months may be fine because your guaranteed checks already blunt market stress.

Why those numbers? Two things. First, history. Markets don’t always cooperate on your schedule: the S&P 500 fell about 57% peak-to-trough in 2007-09, roughly 34% in early 2020, and -18% in 2022 (calendar year). Those are the bear-market facts you’re insulating against. Second, the income backdrop this year is actually helpful: the 2025 Social Security COLA is 3.2% (announced October 2024), which modestly lifts guaranteed income at the exact time many money market funds have still been yielding in the mid-4s to around 5% earlier this year, and roughly the high-4% area recently depending on the fund and week. If your cash earns something while it waits, carrying 12-24 months doesn’t feel like dead weight.

Short version: bigger guaranteed income = smaller cash need. More market exposure or just retired this year = run heavier.

The classic 3-bucket still works, not because it’s cute, but because it keeps you from selling the wrong thing at the wrong time:

1. 1-2 years in cash (Treasury bills, FDIC/NCUA-insured savings, government money market funds). Keep it boring and liquid. Quick reminder: FDIC/NCUA insurance is $250,000 per depositor, per insured bank/credit union, per ownership category.
2. 3-7 years in high-quality bonds (short/intermediate Treasuries, high-grade). This is your refill reservoir after rough equity years.
3. 7+ years in equities (the growth engine you let recover without tapping).

Now, I almost went down the rabbit hole of trying to improve to the penny… and then I caught myself. The point isn’t precision; it’s resilience. If you retired earlier this year and your portfolio is equity-heavy, I’m comfortable telling you to park closer to 24 months. If your pension covers 70-80% of the essentials, you can run at 6-12 months and still sleep fine. If you’re somewhere in between, most folks are, call it 12-18 months. You’ll refill from dividends/interest and from trimming winners in up markets (I’ll show the refill rules next).

One last practical angle: be honest about your “essential” number. People mix groceries with grandkid trips… which is fine, but label them. Essentials keep the lights on. Discretionary gets cut first in a bear market and that flexibility reduces the cash you truly need. And yeah, if rates slip later this year and cash yields ease, it doesn’t break the rule, your spending coverage target stays the driver.

Make it yours: calculate your “years of cash” number

No spreadsheet needed. Grab a notepad. We’re going simple on purpose because the goal is clarity you’ll actually use when markets wobble. Here’s the quick math I walk through with clients, same steps I use for my own household when I, uh, re-add the roof quote for the third time because I can’t remember if it was $13k or $15k.

1. Start with annual essential spend. This is the keep-the-lights-on number: housing (incl. taxes/HOA), groceries, utilities, insurance, basic transportation, meds, minimum property upkeep. Not travel, not gifts. If your bank and card data says “essentials” run $6,000/month, call it $72,000/year.
2. Subtract guaranteed income. Think Social Security, pensions, lifetime annuities, durable rental income (net of vacancy/repairs). The Social Security Administration reported the average retired worker benefit was about $1,907/month in January 2024 after the 3.2% COLA, that’s roughly $22,884/year. If one spouse gets $1,900 and the other $1,400, plus a small pension of $8,000, your guaranteed pool might be around $44,800/year. Your Net Need = $72,000 − $44,800 = $27,200.
3. Layer in known near-term lumpy costs (due within 36 months). Cars, roof, HVAC, dental implants, a kid’s wedding you’ve already committed to. If the SUV replacement is $35k in 18 months and the roof is $14k in ~2 years, include $49,000. Spread over your target window or, cleaner, just add them on top so they don’t ambush you during a drawdown.
4. Pick a target coverage window. Based on your risk capacity and how equity-heavy you are: 12, 18, or 24 months. Markets don’t move on our schedule. As of September 2025, 3-6 month Treasury bills have been yielding around 5% most of this year (the 3‑month T‑bill was ~5.3% recently per Treasury), while year-over-year CPI has hovered near ~3% this summer (BLS). Translation: cash pays something again, which lowers the annoyance cost of holding more cushion if stocks are your main engine.
5. Hold deductibles and self-insurance buffers inside the cash bucket. Home insurance deductible, health plan out-of-pocket max, and your long-term care policy’s elimination period, these are shock absorbers. If homeowners deductible is $2,500, health OOP max $8,000, and you want 3 months of LTC elimination coverage at $7,500/month if needed someday, earmark $2,500 + $8,000 + $22,500 = $33,000 inside cash.

Formula recap: Years-of-Cash $ = (Net Need × Target Months/12) + Near-Term Lumps (due ≤ 36 mo) + Deductibles/Buffers

Let me tie it together. Using the numbers above and an 18-month target: Net Need $27,200 × 1.5 = $40,800. Add Lumps $49,000 → $89,800. Add Buffers $33,000 → $122,800. Round to sanity, call it $120k-$125k. Park that across high-yield savings and short T‑Bills/ultra-short Treasury funds. If you’re newly retired with a 65/35 portfolio and feel markets are… twitchy, consider 24 months for the Net Need piece instead of 18.

One thing that trips people up: what if rates drop later this year? The Fed may cut, sure, and money market yields could slide. Your coverage window doesn’t change. You’ll just earn a bit less carry. If that bugs you, tilt some of the cash bucket into a 6-12 month Treasury ladder while the curve still pays ~5% on the front end. If I’m misremembering the exact last 3‑month print, was it 5.29% last week?, the point stands: short bills are near 5% today; that’s plenty for a sleep-well buffer.

And yeah, it’s personal by design. If your pension covers 80% of essentials, 12 months may be plenty. If you’re market-sensitive and living off a total-return plan heavy on equities, 24 months lowers the odds you sell at the wrong time. If you’re in the mushy middle, most folks are, 18 months hits the balance between resilience and opportunity cost.

2025 rate math: where to park cash without getting cute

Cash is still doing real work this year. You don’t need to chase anything exotic or lock up money for years. Keep it liquid, keep it low‑risk, and mind the tax line. In 2023-2024, many government and prime money market funds printed 7‑day yields around 5% (Crane Data had the broad averages toggling near 5.0-5.2% for much of that stretch), and 3-6 month T‑bills sat in the same zip code. Yields in 2025 remain elevated versus the 2010s, just check the current rate, not the ad you saw a few weeks ago. Money markets reprice quickly.

Here’s the practical menu I use with clients, and in my own accounts when I’m not overthinking it:

• High‑yield savings and money market funds (MMFs) for your day‑to‑day cushion. Look up two things before you park money: (1) the current 7‑day SEC yield, and (2) the expense ratio. Small but real: every 0.10% in fees is $10 per $10,000 per year. In 2023-2024, plenty of large MMFs showed 7‑day yields near ~5% with expense ratios ~0.10-0.30%. Today’s numbers will be different, could be 4‑handle, could still be kissing 5, but they move with policy rates. Savings accounts lag more; some banks still pay under 1% on default savings.
• Treasury bill ladder (3-12 months) for known spending. Stagger a few maturities, say 3, 6, 9, 12 months, so something is always rolling. Interest from Treasuries is exempt from state and local income tax, which often beats a taxable bank yield at the same headline rate. Quick memory check: late 2024’s 6‑month bill hovered near ~5.3% at points; the exact print escapes me, but directionally right, and the state‑tax angle still stands.
• Brokered CDs when you need a specific date on the calendar. You can buy them in a brokerage account for precise maturities. Watch for call features (issuer can yank it early) and know that selling before maturity depends on market price, no free lunch on early withdrawals.
• Beware brokerage sweep accounts. These often pay a fraction of MMFs. In 2023, many big‑broker sweeps sat well under 1% while same‑firm government MMFs paid ~5%, that spread is real money on six figures. Check your statement: if your core cash says 0.3% and the firm’s government MMF shows 4-5%, you know what to do.

Tax angle that gets missed

• Treasuries: interest is federal‑taxable but state‑tax free. If you pay, say, 6% in state income tax, a 4.8% Treasury bill has a state‑tax‑equivalent yield of ~5.1% versus a bank product taxed by the state. That gap is often the tiebreaker.
• Municipal money markets/short munis: can work for high brackets, but spreads on very short munis are thin. In late 2023, national muni MMF 7‑day yields for top‑tier funds often ran ~3.0-3.5% tax‑free when taxable MMFs were ~5%, tax‑equivalent can be competitive for 35-37% federal brackets, less so for lower brackets or states with low/no taxes.

Common questions I hear, “Should I lock in?” Maybe a bit. If you’ll spend the money within a year, a short T‑bill ladder balances yield and certainty. If you’re holding a general buffer, a high‑quality government MMF is fine; it reprices if the Fed trims later this year. And yes, it’s okay to mix: one bucket in a government MMF for liquidity, another in a 6-12 month ladder for the next semester’s tuition or property taxes.

Final nudge: verify the current 7‑day yield and the expense ratio every time. MMFs publish both daily. Banks change promos, with annoying frequency. Keep it boring, keep it simple, and let today’s front‑end carry do its job, no heroics required.

Taxes, Medicare, and RMDs: keep cash from messing up your brackets

Here’s the un-fun truth: the tax code doesn’t care that markets zig when you need to zag. Cash does. A sturdy cash bucket lets you control when you realize income, which means you control your tax bracket, your Medicare surcharges, and those awkward one-off spikes that haunt you two years later. I’ve watched plenty of smart retirees trip an IRMAA surcharge by a hair, purely because they had to sell stock in a bad week to fund living costs during a Roth conversion. That’s avoidable with, frankly, a boring cash buffer.

On RMDs, the SECURE 2.0 law (enacted 2022) moved the starting age to 73 beginning in 2023 and bumps it to 75 in 2033. Translation: you’ve got a multi‑year planning runway. Use the pre‑RMD years to reshape your tax profile. And once RMDs kick in, cash can be the shock absorber that keeps you from selling risk assets just to meet spending while a bear market is biting your statement.

Medicare’s IRMAA is the part most folks underweight. IRMAA looks at your MAGI from two years prior. So your 2025 Medicare premiums are based on 2023 income; your 2027 premiums will reflect the conversions or capital gains you realize in 2025. In 2024, the first IRMAA tier began at MAGI above $103,000 (single) and $206,000 (MFJ) according to CMS; the dollar lines adjust annually, but the two‑year lookback rule doesn’t. The point is simple: if you’re doing big Roth conversions this year, cash gives you the option to live off cash while you throttle taxable sales and keep MAGI in the IRMAA tier you actually want, not the one your broker’s default setting hands you.

How the cash fits tactically:

• Bridge for Roth conversions: Hold 12-24 months of spending in government MMFs or T‑bills so you can convert in down markets without selling stock to fund groceries. Convert shares, pay the tax from cash. That keeps your investment plan and your spending plan from wrestling each other. And yes, it feels redundant to explain it, until the market drops 15% and you’re calm, not forced.
• Bracket management: Map a multi‑year path to age 73/75. Fill the 12% or 22% brackets (whatever is optimal for you) with planned conversions across several years. Use cash to cap your year‑end realized income so you don’t accidentally bump a bracket or a NIIT threshold.
• Capital‑gains harvesting: If markets are flat or down, harvest gains up to the 0% LTCG band in the years before RMDs. Cash lets you cover spending while you pick your spots.
• IRMAA throttle: If you’re near a surcharge line, defer realizing gains and live on cash until January. Or split moves across two tax years. I know, it’s fiddly, but it works.

Real market context matters. As of September 2025, front‑end yields are still doing their job: 6‑month T‑bills have been running roughly ~5.2-5.4% annualized, and high‑quality government money market funds are typically printing a 7‑day yield around the ~5% zip code (check your fund’s website; they update daily). That’s plenty of carry to justify holding a bigger buffer during your conversion window this year without feeling like you’re “leaving money on the table.” Earlier this year, I had a client push a conversion from April to December and used the MMF to fund expenses, their MAGI stayed under their targeted tier by a few thousand bucks. Boring, but effective.

State taxes are the sleeper issue. Treasuries are exempt from state and local income taxes; bank CDs generally aren’t. If your state tax rate is 5%, a 5.2% T‑bill has a state‑tax equivalent of about 5.47% (5.2% ÷ (1-0.05)). In higher‑tax states, say 8%, that bumps the state‑tax‑equivalent yield to ~5.65%. That’s why many retirees in CA/NJ/NY end up preferring T‑bills or a government MMF over CDs, even when the sticker yields look similar.

Quick guardrails I use (just my take, not holy writ):

1. Build 12-24 months of spending in cash‑likes during the 2-3 years around your first RMD. Start earlier if your portfolio is stock‑heavy.
2. Schedule conversions across multiple calendar years between retirement and age 73/75. Re‑check IRMAA tiers each fall before you set the size.
3. Coordinate with state taxes. In a 0% state, bank CDs can be fine. In a 5-10% state, Treasuries or a government MMF often edge them after tax.

Messy reality: it’s not just about the top line yield. It’s about sequencing income so your future self isn’t paying for this year’s good idea with two years of Medicare surcharges.

Is this complex? Yep. But the core is simple: cash buys you control. Control over timing, brackets, IRMAA, and your blood pressure when markets wobble. I’ll take that trade every time.

When to spend the cash and when to refill it

Keep it boring on purpose. Monthly withdrawals come from the cash bucket, every month, no exceptions. That’s the point of the cushion: bills get paid from cash so the portfolio can breathe. Then, set a standing date to review the cushion quarterly. I literally put it on the calendar the same week I check estimated taxes. If the cushion has drifted under, say, 9-12 months, I note it but I don’t automatically refill in a down market. Rules beat vibes.

Here’s the refill policy that saves people from whipsawing themselves:

• Annual top-up from winners only: Once a year, usually January or after you finalize the tax return, trim appreciated assets if the portfolio is above target allocation. Example: your 60/40 drifted to 65/35 after a strong year. You shave equities back to 60 and move the excess to replenish cash. In 2023 the S&P 500 price return was about +24% (source: S&P Dow Jones Indices, 2023), so plenty of folks had that drift. That’s a great refill year.
• Down‑market playbook: Spend from cash as planned and defer refills until a pre‑set recovery signal triggers, e.g., your allocation is back within 1-2% of target, or the total portfolio value exceeds the last pre‑drawdown high. Don’t wing the signal. Write it down once when you’re calm and stick to it.

Why this works: history keeps reminding us the pain comes in clusters. The S&P 500 fell about 19% in 2022 (price return), and core bonds (Bloomberg U.S. Aggregate) were down roughly 13% the same year. A classic 60/40 was off ~16%, that’s when the cushion earns its keep. And yes, 2020’s peak‑to‑trough was roughly −34% in a month and change. You won’t refill into that; you’ll let the cushion do its job and wait for your signal.

Dynamic sizing helps too. Make it a living buffer, not a museum piece:

1. After big gains: If equities pop 15-20%+ in a year and you’re above target, slightly enlarge the cushion, say, add 3-6 months, while trimming back to target. It banks the win without over‑de‑risking.
2. During long drawdowns: Let the cushion shrink slowly. If you started at 18 months, you might allow it to glide toward 9-12 months before re‑assessing. You’re buying time, not trying to time.

I get it, headlines will tempt you to meddle. I still remember 2008-09; the S&P 500’s peak‑to‑trough drop was about −57%. People who kept a rule and spent from cash slept better, period. Same idea after 2022: by the time 2023 rebounded, the refill felt obvious because the portfolio was back near targets. The rule removed the debate.

Guardrails reduce regret. You’ll make fewer “hero trades,” and, honestly, you’ll stop second‑guessing every rate cut rumor or earnings miss.

One more small but real thing: be consistent with housekeeping. Quarterly review, annual refill decision, and pre‑agreed recovery signal. That rhythm is dull. Which is what you want. And yeah, I’m a little too enthusiastic about dull right here because it works.

The payoff: calmer income, fewer mistakes, better taxes

This is the part that doesn’t show up in a yield table but matters way more in real life. A right-sized 2025 cash buffer buys control: steadier withdrawals, fewer forced sells, and room to line up taxes and healthcare on your schedule. If you came here wondering “how-much-cash-cushion-for-retirement-in-2025,” this is the why behind the number.

Prevents forced selling in ugly markets. The hidden cost that stings isn’t a few basis points of yield, it’s selling stocks after a big drop to fund living expenses. Since 1980, the S&P 500’s average intra‑year decline is about 14% even in years that finish positive (J.P. Morgan Guide to the Markets, long‑run stat through 2023). We’ve all lived how that feels: 2020’s −34% fast fall, 2022’s broad drawdown, then the snapback in 2023. A 9-18 month cash lane gave folks time to avoid panic selling and let the recovery do the heavy lifting. That’s not theory, I watched retirees who spent from cash in late 2008 avoid locking in that −57% trough and later rebalance into strength. Pain avoided beats yield chased.

Stabilizes income and keeps rebalancing disciplined. With a preset spend-from-cash rule, your paycheck stays predictable while markets do their thing. That predictability makes it easier to rebalance into weakness, buying what’s down using periodic refills, rather than the other way around. I was about to say “liquidity management,” which sounds fancy; it’s really just having enough dry powder so you can act like the plan’s boss, not the market’s passenger.

Creates tax flexibility for RMDs, Roth moves, and IRMAA control. The SECURE 2.0 rules keep Required Minimum Distributions starting at age 73 (effective 2023). Cash on hand lets you:

• Time Roth conversions into lower‑income months or quarters without selling equities at a bad moment. You can sweep taxes from cash, keep shares intact, and still fill your target bracket.
• Handle withholding on RMDs cleanly and bunch gifts or deductions when it actually benefits your return.
• Manage Medicare IRMAA cliffs. IRMAA uses a step system where $1 over a threshold can lift premiums for the whole year. In 2024, the first IRMAA tier adds about $69.90/month to Part B (~$840/yr) and $12.90/month to Part D (~$155/yr) per person (CMS). That’s roughly ~$1,000/yr each you may avoid by smoothing income with cash. 2025 brackets update, but the “cliff” mechanic remains the same.

Fewer mistakes, measurably. Morningstar’s 2024 “Mind the Gap” study showed investors earned about 1.7 percentage points less per year than their funds over the 10 years ended 2023 because of timing and behavior. Cash isn’t magic, but it lowers the odds you’ll be the seller at 3:58 pm on a red Friday. That, compounded, matters way more than squeezing an extra 0.25% in a savings tier.

Control beats clever. A boring cash buffer, refilled by rule, tends to lift lifetime after‑tax returns, and honestly, your sleep, without heroics.

Is there gray area? Absolutely. Healthcare timing, pension starts, uneven spending, those make the “right” number personal. But the core trade stays the same in 2025: give up a sliver of yield, gain the ability to choose when you sell, when you convert, and when you cross a Medicare line. That’s the payoff.

Frequently Asked Questions

Q: How do I figure out the right cash cushion so I’m not forced to sell stocks after a drop?

A: Start with your annual “net withdrawal need”, that’s spending minus guaranteed income (Social Security, pension, annuity). Multiply by 18-24 months as a base case; use 24-36 months if you’re retiring this year or you hate volatility. The article’s point stands: this is bad‑timing insurance against sequence‑of‑returns risk. Example: You spend $120k/yr, get $60k from Social Security, so you draw $60k from the portfolio. A 24‑month buffer = $120k in cash‑like assets. Refill rules matter: 1) Top‑up the cash bucket after up years (e.g., when your equity sleeve is +10% or your 60/40 is above your plan’s return hurdle). 2) Pause refills after a drawdown (say, when equities are down >10-15%) so you aren’t selling low. 3) Rebalance back to targets annually so the buffer doesn’t sprawl. I’ve watched too many folks win the fee fight and lose to bad timing, this fixes that.

Q: Should I worry about sequence risk if I’m retiring later this year?

A: Yes, if you’ll be taking withdrawals in your first 3-5 years, it’s a real risk. The article reminds us why: the S&P 500 fell ~34% in 33 trading days in 2020, 2022 saw ~25% down for stocks while core bonds lost ~13%, and leadership is concentrated again this year, so swings bite. If you need $1 out every month, you don’t control when markets cooperate. Solution: hold 18-36 months of withdrawals in cash/T‑bills, set an autopilot refill rule, and keep 1-2 years of flexible expenses you can cut if markets wobble. It’s not about maximizing yield; it’s about not being a forced seller the week your property‑tax draft hits.

Q: Is it better to park the cash buffer in a high‑yield savings account, T‑bills, or a money market fund?

A: For money you’ll spend in the next 1-3 years, keep it simple and liquid. Practical mix I use with clients: 1) 3-6 months in a high‑yield savings account (FDIC/NCUA insured, instant access). 2) 6-18 months in 3-12 month Treasury bills (laddered, auto‑roll). Treasuries are state‑tax‑free; confirm your bracket to see the after‑tax edge. 3) A Treasury or government money market fund for the rest (check expense ratio and custody, SIPC isn’t insurance on market value, just the account). If you want a set‑and‑forget option, a brokerage settlement money market plus a 6‑month T‑bill ladder works fine. Avoid reach‑for‑yield stuff (MBS funds, long corporates) in the buffer; price wiggles defeat the purpose. And if you’re in a high tax state, Treasuries usually win after tax. Tiny note: no‑penalty CDs can fit for the near‑term slice if the rate beats T‑bills.

Q: What’s the difference between a plain emergency fund and a retirement cash buffer?

A: An emergency fund covers surprises (HVAC dies, medical bill, the dog eats a sock). A retirement cash buffer covers predictable withdrawals so market drops don’t force stock sales at bad prices. In dollars: pre‑retirees often keep 3-6 months of expenses; retirees should anchor the buffer to 18-36 months of portfolio withdrawals net of Social Security/pension. Different jobs: the emergency fund is “stuff happens”; the buffer is “paycheck replacement.” And yea, you can keep them in the same HYSA if you label sub‑accounts so you don’t accidentally spend your paycheck buffer on a kitchen remodel.

@article{how-much-cash-cushion-for-retirement-in-2025,
    title   = {How Much Cash Cushion for Retirement in 2025?},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/retirement-cash-cushion-2025/}
}