How Much Should You Hold in Stocks, Bonds and Cash in Retirement?

Core Insights - The article discusses various retirement investing strategies, particularly focusing on the "bucket strategy" which organizes retirement assets into three distinct categories based on the timing of cash needs [1][2]. Bucket Strategy Overview - The bucket strategy divides retirement assets into three buckets: a cash bucket for immediate needs, a medium-term bucket primarily for bonds, and a long-term bucket for stocks aimed at growth [3][4]. - The approach is not designed for maximizing investment returns but rather to ensure retirees have access to necessary cash flows regardless of market conditions [4]. Model Portfolios - Three model portfolios are created based on varying risk tolerances, utilizing exchange-traded funds (ETFs) in tax-deferred accounts to cover living expenses [5]. - The aggressive portfolio is tailored for a retirement lasting over 25 years, while the moderate portfolio is for those expecting retirement to last between 15 and 25 years [6]. Asset Allocation - In the aggressive portfolio, the allocation is as follows: 8% in cash for the first two years, 32% in bonds for years three to ten, and 60% in stocks for year eleven and beyond [7].