I appreciate all the comments on “emergency funds” but does everybody understand that the actual original question was referring to the cash balance you sit on when you are retired - presumably early given the purpose of this thread (ie 45 years old with no regular income and possibly kids still living in your house)...
Here’s an excerpt from Root of Good on what they did there: (Justin and his wife retired in their 30s with somewhere under $2MM in assets).
During 2017 we moved to a slightly more conservative asset allocation that now includes about $125,000 of bonds and $50,000 of money market and CDs. The remaining 90% of our assets are fully invested in the stock market which means we do really well when when the market goes up but we suffer quite a beating when the market drops.
So 10% of their total assets at the time were bonds/money market/CDs and the $50,000 in actual cash represented almost 2 years (24 months) living expenses or “emergency fund”.
Here’s a non FIRE article by Kiplinger advocating for regular retirees to maintain 3 years in cash to “ride out a bear market”:
3 years may be extreme but the concept holds value in theory. The worst thing you can do while in the midst of a significant market downturn as an early retiree is liquidate a portion of your portfolio - it can really mess with your SWR for years to follow. I think to answer the actual question, for the early retiree I’d say a minimum of 12 months in cash and preferably 18-24 months. Most early retirees achieve that through lower than average expenses so that number may only be $25k or $50k.
Even if 3 months was the right answer - for a frugal early retiree (assuming $36k annual expenses), would anybody say that $9k is a large enough emergency fund? This person’s sole source of income is potentially dividends from and sale of stocks...Just food for thought for my FIRE chasing friends here