Conclusion

That correlation risk is real and it's not going to go away. It's why by the way you keep that ultra short bucket. But if you're close to retirement and you're already in retirement, I'm not going to just blindly say that you should have a 60/40 and you should call it a day. I'd ask, what type of bonds do you own? What's the duration? What's the credit quality? And does my withdrawal strategy account for the possibility of stocks and bonds having a down year together?

For some of you watching this, a 60/40 is the right move. And for others of you watching, depending on your risk tolerance, maybe a 70/30 makes more sense or an 80/20. The thing is, there's no universal answer. But be careful what you read online that pretends otherwise. So, are bonds dead? No. Bonds are not dead. Bonds are not going away. But the version of bonds that worked for the past 40 years, where you just clipped coupons and watched its price drift higher and rate as rates keep falling, that version is probably dead.

And what replaces it will be a strategy where bonds provide income, and they protect you against volatility. I have gone on way too long talking about bonds. My guess is that no one is left watching. But if you are, and you heard me mention that Kitzes study, and that most people in his study that used the 4% rule with 60/40 end up with way more money at the retirement, you're like, "What did he say? I want to hear more about that." Well, you're in luck. So, I have a whole video where I go deeper into that study, and you can watch it now.