How much cash should you keep in retirement?

There is no single universal cash number

A cash reserve can cover emergencies, near-term planned spending and some withdrawals during weak markets. But cash is not the same as a long-term retirement portfolio. If prices rise faster than the interest earned, cash loses real spending power.

Think about three cash jobs

• Emergency cash for unexpected bills.
• Known spending due soon, such as a car, repairs or tax bill.
• A withdrawal buffer so you are not forced to sell investments at an awkward time.

Cash matters more before pensions are accessible

If you retire before private pension or State Pension income begins, accessible cash, ISAs and other non-pension assets may need to cover a bridge period. That is different from holding cash simply for emergencies. The pension access bridge guide explains this timing problem in more detail.

A practical way to frame it

Instead of asking “what percentage should be cash?”, ask what cash must do. If essential spending is covered by pensions and State Pension, the reserve may be smaller. If several years of spending depend on accessible assets, the cash and ISA plan needs more care.

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