Okay, so it's not the latest - this video is from back in March:
But it's a short video, worth watching, I think. Harold Evensky is one of the big names in financial planning - lots of publications, editor of several books, etc.
A bit from the transcript:
Evensky: The fact of the matter, it really makes sense for anyone. I think we believe that the risk of investing in the market is the short-term volatility of the market. So we developed back in the early '80s I think we call our five-year mantra; "five years, five years, five years," simply means we don't believe anyone should invest money that they are going to need in the next five years. Too much risk...
Stocks or bonds, too much risk that they will need at the wrong time. So, we carve out for any lump sum, someone says, "Gee, I want to buy a second home three years from now," we will carve that out of the investment portfolio and put it in short-term bonds or cash. When it comes to retirement income, someone says, "Gee I got a million dollars, I need $50,000 year out." And trying to figure it out, carving five years' [worth] of cash flow is, there is too much opportunity cost, all that money sitting in cash, so we experimented and came up with two years. So I said, "OK, put two years in cash, take the other, the $900,000 and invest it in a total return portfolio."
Anyway, I thought this might be an interesting thing to discuss, particularly given some of our mif-p folks who are, afaik, already retired and have cash buckets that they use.
It isn't entirely clear, however, how to manage *replenishing* that two-year bucket of cash during retirement. If the markets are down and the rest of the portfolio has tanked, do you spend down that two year bucket, simply rebalance and treat the cash bucket as part of your regular asset allocation, opportunisticly take profits from other parts of the portfolio and shove it in there? It's a messy business and of course, the details on how any individual handles it are likely to vary a lot.
It also says nothing about other possible dimensions, especially for a retirement plan, such as putting a chunk of the retirement portfolio into an immediate annuity (or keeping such a thing as a backup plan if the portfolio gets hit so hard that it looks like it won't recover well enough to keep funding the cash bucket adequately).