Bucket Strategy

The bucket strategy splits your portfolio by time horizon. A near-term bucket holds cash and bonds for the next few years of spending; a medium bucket holds a balanced mix; a long-term bucket stays in stocks for growth you won't touch for a decade or more. You spend from the safe bucket and periodically refill it from the others.

Its main benefit is behavioral and practical: knowing that several years of spending sit safely in cash makes it easier to leave stocks alone during a downturn rather than selling at the bottom — a direct buffer against sequence of returns risk. Critics note it's roughly equivalent to a sensible overall asset allocation, but the mental framing helps many retirees stay the course.