5 years Cash Cushion: Good or Bad?<\/h5>\n\n\n\n

\n
• 5 year cushion hurts more than it helps. In fact, anything more than 2 years is not beneficial<\/li>\n\n\n\n
• If you have a diversified portfolio (including bonds), you shouldn\u2019t need that much of a cash cushion<\/li>\n<\/ul>\n\n\n\n

  Bonds: When to Invest?<\/h5>\n\n\n\n

  \n
  • During the “red zone” (5-10 years before and after retirement)\n
    \n
    • This is when your portfolio is the largest and bad markets hurt the most. Good to own bonds during these times.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
    • Determine your capacity for risk and tolerance for risk\n
      \n
      • Younger people are usually deemed more risk-tolerant<\/strong>, when in fact, it’s their capacity<\/strong> for risk that is high because they have a longer time horizon<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

        FIRE Adjustments<\/h5>\n\n\n\n

        \n
        • Levers you can pull to move 4% number up or down
          • Time horizon: shorter time horizon \u2192 higher withdrawal rate<\/li><\/ul>\n
            \n
            • Diversification: lift <\/li>\n\n\n\n
            • Taxes: drag<\/li>\n\n\n\n
            • Spending flexibility: lift<\/li>\n<\/ul>\n<\/li>\n\n\n\n
            • Make small adjustments as you head towards your goal
              • Analogy: flight plan from DC to SF<\/li><\/ul>\n
                \n
                • If you head west towards SF, you\u2019ll generally get there +\/- 500 miles<\/li>\n\n\n\n
                • If you want to hit the nail on the head, you make small adjustments throughout the flight course<\/li>\n\n\n\n
                • You don\u2019t want to wait until Nevada to make a sharp turn towards SF<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                  Reaching FIRE<\/h5>\n\n\n\n

                  \n
                  • FIRE movement has become too much RE and not enough FI<\/li>\n\n\n\n
                  • Mindset should be: I\u2019m going to accumulate enough money so that what I decide to do with my time is no longer dependent on money.<\/li>\n\n\n\n
                  • Mindset should not be: I don\u2019t have to work anymore<\/li>\n\n\n\n
                  • After people endure the last few years of working and reach FIRE, they become bored and end up going back to work (becomes Uber driver just to do something)\n
                    \n
                    • If they could\u2019ve planned to be making money at retirement, they could\u2019ve FIREd a lot sooner<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                    • What\u2019s the worst is someone who is currently still working at a job they hate, so they can reach their FIRE number and never work again. If they factor in potentially making money during \u201cretirement\u201d (side hustle, or a job they enjoy that pays little), they could decrease their FIRE number and quit earlier<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                      Notes for BiggerPockets Money Podcast 120Guest: Michael KitcesAudio time: 1 hr 23 minRead time: 2 min One Line Summary The…<\/p>\n","protected":false},"author":2,"featured_media":6840,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[121],"tags":[],"class_list":["post-6830","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate"],"yoast_head":"\n