<<Sure seems to me that the only reason for holding five year's worth of money market funds is to use it as a hedge against a down market. Otherwise you get no benefit from it unless short term bonds out-perform stocks. Not a bet I'd care to make.>>
*******************************************************
Holding 5 years of cash gives the retiree a buffer which is just as good as hedge against a down market. It is unlikely that we will see 5 years of down markets. The system works well when done mechanically.


<<Construct a "bond ladder". Buy five years worth of individual bonds (T-bills or any other BBB or better bonds); spread out the maturity dates over every quarter for the next five years. This lets you get slightly better returns, without introducing the
fluctuation risk of an intermediate term bond fund.>>
*******************************************************
I already do this with treasuries. I say MMF because it keeps the example simple but in fact i keep 2 years of MMF and the rest in laddered treasuries.