Week 44 Day 2: The Cash Buffer: Your Emergency Shock Absorber

A cash buffer (1-2 years of spending in savings or money market) means you never have to sell stocks during a crash. If the market drops 30%, you spend from cash. By the time the cash runs out, the ma...

A cash buffer (1-2 years of spending in savings or money market) means you never have to sell stocks during a crash. If the market drops 30%, you spend from cash. By the time the cash runs out, the market has historically recovered. The buffer prevents sequence-of-returns risk from destroying your retirement.