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1) So you are saying CD's and Treasuries are better than a bond fund now because of interest rate risk? I can get that...

Maybe you already know this but FDIC insured CDs and Treasuries are as safe as you can get in fixed income investments. Risk goes up from there. But the advantage of the bond (or CD or Treasury ladder) is that by holding to maturity you get the full face value of the bond even if interest rates have caused market values to change. This exposure to interest rate variations can be a concern if you hold bond funds, especially if you own only the minimums.

2) How would you structure them before / after withdrawal phases? ie, just set up a 5yr CD ladder and just buy a new 5yr every year?

As Vickifool noted, the easy way to do this is simply to start buying 5 year CDs (or or) 5 years before retirement. Ideally you want to buy 1 year of expenses worth every year. Then as they begin to mature, you continue the process by buying a new 5 yr CD (or or) each time one matures. This way you always have the 5 yr ladder and its interest rate paid tracks the market but with a 5 yr moving average. You avoid peaks and valleys.

4) Can he handle anything as "difficult" as a ladder? -- Left to himself, no. He can't/won't. Now, I would be happy to do the research and call him once per year. I enjoy finance stuff. BUT, I'm really not sure that it would be a realistic arrangement.

See above. It can be quite simple. You can do as little as one CD purchase per year (or you can spread them out to more intervals (3 mo/ 6 mo/ etc) in smaller amounts if you want).

5) So, if a ladder doesn't make sense, then are you suggesting he buy VBIIX, not VBMFX?

Bond fund has a few more risks than ladder, but can be OK. But I would make it more than the minimum to cover some of the market changes likely to happen over the years.
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