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I came across this video from a financial planner, James Conole, on how he helped a couple in their mid-60s re-allocate their portfolio, just as they were about to retire. The couple had $3.2 million of liquid assets, mostly in an S&P 500 index fund (VOO) and a Fidelity target date 2025 stock/bond fund.

What I like about Conole's approach is that he worked backwards from what the couple said they needed for living expenses and discretionary travel, analyzed their projected annual outflows and inflows, and set up an asset allocation to meet those requirements. The couple said they needed $8,500/month in living expenses, plus $20K/year for leisure travel. So they needed about $120K/year post retirement.

Conole then put 5 years of living expenses ($600K) in short term treasuries and bond funds. So this is about 20% of the portfolio. Then he put 70% of the portfolio in a diversified set of stock funds, and another 10% in a total bond market fund. The idea here is that they would live off the interest and principal from the cash and bond pile during years when the market was down, and sell from the stock fund during years in which stocks do well.

https://www.youtube.com/watch?v=k1iRsKjeTOE&t=929s

This advice resonates with me, and is similar to what I've been doing as a retiree. Thoughts?

What’s the portfolio expense ratio?

If he had done the opposite of what he did, I would have agreed. But I don't think a bond fund is appropriate for short term living expenses, and "a diversified set of stock funds" screams high expense ratio and trading costs. VOO (or VTI) are already "a diversified set of stock funds" but in a single, really low expense ratio fund. It also seems like the couple didn't want to do a lot of managing investments, so he's also made their life more complex, probably to no benefit.

While I'm not to 1 stock fund, 1 bond fund, and some highly liquid cash equivalents yet, that's my goal.

But that's just me.

Personally, I don't like bonds or bond funds. I own some because I have a target date fund, but that's it. Everything else is stocks.

Early on in my investing I learned the hard way that bond funds are NOT "safe". Far from it. So I'll stick with equities, though I am considering doing a laddered CD structure (which is relatively safe, and sometimes you can get CDs that pay significantly higher than inflation).

I don't think a bond fund is appropriate for short term living expenses, and "a diversified set of stock funds" screams high expense ratio and trading costs.

I agree that expense ratios are a consideration. I use VOO for the bulk of my stock portfolio, but also own quite a bit of QQQ, and have some LTBH stocks like MSFT and AMZN. For dividends with the hope of some growth, I currently own Manulife (MFC) and some UK and Brazilian banks.

... I am considering doing a laddered CD structure (which is relatively safe, and sometimes you can get CDs that pay significantly higher than inflation).

Yes, instead of CDs, I use Schwab's US Treasury Money Market fund (SNSXX) which currently yields 5%, and pays the interest monthly. So no need to create laddered CDs.

Hmm. I should look into that. I was with TD Ameritrade, but Schwab bought them. So now I have a Schwab account.

I took most of the money that I will need from now until 70 and put it in my Fidelity account and into treasuries with about 20% of it in stocks. My other account that I'm not currently using and hopefully won't need until much later or if I pass away first, is more like 75% stocks and 25% treasuries.

Like some others here, I've never been big into bonds. If I want security I'd go with treasuries, CDs or MYGAs (although I'm not overly fond of them).

(I'm still waiting for my TD account to get moved.)

Rich

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