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InvestorLou asks,

Hi Intercst,

I wonder if you happened to see The Wall St. Journal the other day, they had a supplement concerning funding for retirement?

The article concerning the 5 bucket approach caught my went like this
1. keep an amount equal to 4 yrs. of expenses in cash/bonds, the rest in stocks.

2. in the 1st bucket, put in 1 yrs. of expenses into a money market fund
3. in the 2nd bucket, put 20% in short term securities<up to 2 yrs. maturities>
3. in the 3rd bucket, put 50% in intermediate term securities<3-10 yrs. mat.>
4. in the 4th bucket, put 30% in long term securities<10-30 yrs. mat.>
5. in the 5th bucket, put balance of portfolio into stocks.

Said in the article that formula would have to be rejiggered each yr. to account for the cash thrown off by bonds,corporates, treasuries, etc.

I thought the article was interesting enough to look at my own portfolio, and find out that I have too much in the MMA....but I thought I would find out what other retired folks thought about the 5 bucket approach, apparently this has been around for awhile.

It's probably a little riskier than having 5 years worth of living expenses in cash and CDs with 1 to 5 year maturities. I'm not sure I'd want money I'm going to spend in four years to be in 10-30 year bonds. I try to match the maturities of my investments to when I plan on spending the money.

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