The 18-Month Rule: Reinventing Retirement Liquidity
The transition from earned income to asset-funded retirement demands a radical rethink of emergency reserves. Traditional three-to-six-month cash cushions—adequate for working years—become perilous when market downturns collide with unexpected expenses.
Retirees face a unique vulnerability: forced liquidation of depreciated assets locks in losses, potentially derailing decades of careful planning. Financial planners now advocate for an 18-month liquidity buffer—a specialized cash reserve shielding portfolios from sequence-of-returns risk.
This approach recognizes what paycheck-to-portfolio transitions ignore: capital preservation requires war-chest liquidity far beyond conventional wisdom. The new math of retirement security starts with bulletproofing the first 540 days.
