How much emergency cash pre-retirement

LegacyMum

Hi there, some of your sage advice please. I hope to retire in 3-6yrs. I'm 57 , woman, single. My pension will be around £620k. I have £10k NSI Bond and £44k in Kent Isa which mature in Sept and £12k in Vanguard ISA life strategy 80%. This is my only cash/emergency savings. 

3 years to cover monthly expenses in retirement is £90k (£2,500 per mth) - I'd like to have an emergency pot and follow cash laddering in case of market volatility. I will be earning for the next 3-5 years so can add to this pot, but my priority is to pile money into my pension. 

Can you advise on where best to place my cash over the next 3-5 years - is the Vanguard money fund - VASTMGA worth considering to put inside my S&S ISA with Vanguard - growth seems consistent but I know it is not protected by the fscs. My money will be in one place but I'm also happy to spread. Am I better to keep this full cash amount of £54k in cash (ISA's) or am I better to put a percentage in my Vanguard 80% equities ISA - or less risky s&s  ISA?

All advice very gratefully received, with many thanks.

leosayer

How precarious is your job?

If it's secure then I'd keep what you already have in cash (£56k) as an emergency stash and then continue to aim to get the best interest rate whilst avoiding tax on the interest. The MSE site has good resources on this.

Of more importance might be how your pension is invested, how you plan to take your pension and how you intend to mitigate sequence of returns risk. 

Marcon

Asking questions like this in isolation isn't going to give you the best outcome. It's your overall finances that matter, not any particular 'piece' of them.

Maybe follow the suggestions made a couple of months ago to take some proper financial advice: https://forums.moneysavingexpert.com/discussion/6602554/advice-on-financial-priorities-for-the-next-5-years-retirement-planning-mortgage/p1

Albermarle

Vanguard VLS 80 does not = cash.
In a big crash it could drop by a third in a few days.
It is a long term investment.

DRS1

Albermarle said:

Vanguard VLS 80 does not = cash.
In a big crash it could drop by a third in a few days.
It is a long term investment.

To be fair I don't think the OP was counting the VLS 80 in the cash holdings - I think it was the NSI bond she was including.

OP you asked about a cash ladder.  To my mind that would mean having 30k in three fixed rate bonds maturing when you are 62, 63 and 64.  But I am not sure these exist with banks or building societies (5 years is the longest one at the moment).  An alternative would be a gilt ladder.  This site might be helpful on that

Gilt Ladder Builder · Streamlit

An advantage of gilts is that you could keep them outside an ISA if you got the right gilts (low coupon ones) and then you could perhaps focus the ISA on things like VLS 80.

There is one obvious question - you say you have £54k in cash but need £90k.  If you are prioritising pension contributions where is the other £36k going to come from?  Are you going to be saving £20k pa into the ISA over the next 3 - 5 years as well as the pension contributions?  People on here will tell you to put the pension contributions first but can you do both?