Most people say you should keep 5 years of expenses in safe assets. But that's actually inefficient. A smarter method is to size your safety bucket based on expected equity drawdown and market recovery time.

For example, if you expect a maximum 50% fall and a 5-year recovery, you don't need 5 years of expenses in cash. You need only 50% × 5 years. The remaining half can still be funded by your equity portfolio since it only fell by 50%, leaving it sufficient to cover 50% of expenses.

This simple shift reduces cash drag, improves long-term returns, and strengthens retirement resilience.