Bucket Strategy Allocator Calculator
Bucket Strategy Allocator
Allocate your retirement portfolio across short-term, medium-term, and long-term buckets to manage cash flow and reduce sequence-of-returns risk.
Formula
Short-Term Bucket = Annual Spending x Short-Term Years; Medium-Term Bucket = Annual Spending x Medium-Term Years; Long-Term Bucket = Total Portfolio - Short Bucket - Medium Bucket
Frequently Asked Questions
What is the bucket strategy for retirement?
The bucket strategy divides your retirement portfolio into three time-based segments: a short-term bucket of cash or equivalents for 1 to 2 years of expenses, a medium-term bucket of bonds and stable investments for 3 to 7 years, and a long-term growth bucket of stocks for beyond 7 years.
How does the bucket strategy reduce risk?
By keeping several years of spending in safe, liquid investments, you avoid selling stocks during market downturns. The growth bucket has years to recover from volatility before you need to tap it.
How often should I refill the buckets?
Typically you refill the short-term bucket annually by selling from the medium-term bucket when bonds perform well, or from the growth bucket during strong market years. Some advisors refill on a set schedule while others use market conditions as a guide.
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