Patricia Barrett, a financial advisor with Lifetime Planning LLC in Houston, recently illuminated one of the mistakes that people can make when planning for their retirement—a case of water, water everywhere, and nothing to drink.
DW and I are 4.x years out (@ 55). We are building 3 years of cash for preferred expenses which is about 60% higher than our current expenditures. We could easily make it on the same expenses as today (we have company health benes coming) In a pinch that 3 years of money could last 5 years (cash). That represent about 10-12% of our target portfolio balance (if we get there... we need about 5% gain/yr). Most of our saving over the next 4.5 years will go into cash and/or Short-term bonds. We will have another 30% in intermediate term bonds. This is enough to get us from 55 - 65 easily. The equity portion of the portfolio will be rebalanced to an overall S/B mix of 50/50 by 65. and downward as we age.