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LearnFAQRetirement Planning

What is the bucket strategy for generating retirement income?

Answer

The bucket strategy splits your savings by when you'll spend it. Bucket 1 holds 1–2 years of cash for near-term spending, so a market drop never forces you to sell stocks at a loss. Bucket 2 holds 3–10 years in bonds and conservative investments for the medium term. Bucket 3 holds the rest in stocks for long-term growth and inflation protection. You spend from Bucket 1, and periodically refill it from Buckets 2 and 3 – ideally selling stocks to refill after good years, not bad ones. The main benefit is psychological and behavioral: a visible cash cushion makes it far easier to ride out volatility without panic-selling. The tradeoff is a bit more complexity and cash drag. Map your own buckets against projected spending at wealthserene.com/goals/generate-retirement-income.

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