Congrats on retiring!
Do NOT roll the 401(k) into an IRA. You probably already knew that, but doing so would ruin the age 55 rule so I just wanted to make sure you knew that. ;)
If you are taking out a withdrawal to cover an entire year's worth of expenses then I would put it in something very safe, most likely a high yield money market account. There are a few online banks paying around 1%.
Even a conservative investment like short term bonds or VASIX can have down years where they are down 5-10%. If you take out 1 year's worth of expenses then being down 10% means you run out of spending money in November, not fun. Just stick with the money market/savings.