How Much Should Retirees Keep in Stocks, Bonds and Cash?

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][4]. Bucket Strategy Overview - The bucket strategy divides retirement assets into three buckets: a cash bucket for immediate needs, a medium-term bucket primarily consisting of bonds, and a long-term bucket focused on stocks for growth [5][6]. - The approach is designed to provide retirees with necessary cash flows while not necessarily aiming for the highest investment returns [6]. Model Portfolios - Three model portfolios are created based on different risk tolerances: aggressive, moderate, and conservative, utilizing exchange-traded funds (ETFs) in tax-deferred accounts [7]. - The aggressive portfolio is tailored for retirees expecting a retirement lasting over 25 years, while the moderate portfolio is for those anticipating a retirement of 15 to 25 years [8]. Asset Allocation - In the aggressive model portfolio, the asset 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 [9].