I don't think that customary advice about holding cash has any special relevance to superannuation and retirement.
Just think about what strategies would be best for living from your investments. There is no mandated requirement to hold any cash. Your investment decisions are yours.
It is a bit like advice that you should move to low growth low risk investments when moving to a pension phase. I reckon that I will have at least 30 years of life left in me since retiring - that is quite enough to have a long term view (if that is thought desirable). Since retiring I have invested in higher risk areas with better returns than in earlier years when I did not have much time to looking after investments.
Another piece of advice that I object to is that retirees should hold investments that are capital stable and live off the regular flow of interest payments. Alternatively, if you have had 40% capital growth in an investment well you could sell 5% to match the income from the term investment, and be far better off.
Of course, if you have let the asset value of your investments fall below the purchase price then you will naturally feel discouraged from selling, just to fund your extravagant retirement lifestyle.
So is there a case for holding a large amount of cash? Not necessarily, because you arguably should have protected the asset value by selling before the unrealised profit became negative (and thereby realising some cash anyway). Having a large amount of cash could well cause you to not make critically important decisions (like getting out of a collapsing market).
Having said all that, I do hold some cash - plan to have an OS trip sometime, but not quite sure when, and if the market is looking fearsomely bad it might all be cash. And I can see a time when I can't be bothered researching enticing prospects and will be happy to just receive some nice reliable and predictable income from say a term investment!
