I personally keep around three months expenses in cash, and don't think for people like "us" who save a large percentage of our income there's any reason to have more (unless maybe you are feeling you're going to be laid off soon).
Since I save around 50% of my take home pay, if I have an unexpected expense (say a very large one totaling the full three months expenses cash stash), it would only take me three months of foregone investments to replenish it.
My cash-hoarding behavior began in 2009 when I narrowly survived a round of layoffs at my then-employer, so that WAS a concern at one point, but is no longer really very realistic. I work in a technology field that is rapidly growing (22% projected annual growth according to the BLS numbers, which I highly recommend for Mustachians who are considering career options check out). Realistically, the risk of me being unemployed for a long stretch of time is quite low. For one thing, I now have 5+ years of experience in my field and have a fairly good resume. And working in smaller companies has made me tough as nails and quick to adapt.
I consider it more FU money which gives me the confidence to invest the rest of my money, knowing that I'll survive most economic calamities relatively unscathed. So I don't
expect to need this money, but having it makes me feel okay with putting 40%+ of my take-home pay into my investments. If I had significantly less in my emergency buffer fund, I would probably be much more paranoid about market volatility. As it stands, if the market tanks a la 2008 and the job market suddenly dries up, I could hunker down for a few years in some low-rent area without touching the nest egg.
But like I said, it's pretty unlikely. I'm probably keeping 20%-30% more than necessary in the buffer so I've been slowly whittling it down to see how comfortable I feel. Thanks for your comments and perspective.
