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For those who retire on investments and especially those who retire early--before Social Security age, Fooldom usually suggests having a minimum of 5 yrs living expenses in a laddered maturity bond ladder. This gives you interest from the bonds and the maturing bond to live off of. To continue the ladder as each bond matures you buy a new bond of five year maturity.

This keeps you from selling equities in a down market. You have a 5 yr buffer, But ideally in good times you sell equities equal to a year of living expenses each year and use that to buy another bond.

When interest rates are low, when equity returns are not so good, it becomes necessary to scale back expenses a bit, but it is also important to make hay when the sun shines. In good times, you need to be fully invested to get optimum returns and build reserves to cover the down time.

This works best for those willing to accommodate market volatility. Roll with the punches. You will be Ok if you have adequate resources.

For those uncomfortable with risks, annuities can be used. Laddered bond portfolios can help. Or perhaps a managed account is the right answer.
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