Rather than a single withdrawal percentage, the bucket strategy segments a portfolio into cash for near-term spending, bonds for the medium term, and stocks for long-term growth.
How it works
Years of expenses times annual expenses sizes the cash bucket. The same math sizes the bond bucket. Whatever remains of the total portfolio becomes the stock (growth) bucket.
What this does not include
This shows the initial bucket sizing only — the actual strategy also involves periodically refilling the cash bucket from the others (ideally during market upswings), a rebalancing process this static calculator doesn’t model over time.
How to use this calculator
- Enter annual expenses, cash and bond bucket sizes in years, and the total portfolio value.
Frequently asked questions
Why hold a cash bucket at all instead of just bonds and stocks?
Cash provides spending money without needing to sell any investment during a downturn — the core appeal of the bucket approach is avoiding forced stock sales at depressed prices.
How often should the cash bucket be refilled?
Approaches vary, but many practitioners refill opportunistically during market upswings rather than on a fixed schedule, preserving the cash cushion through downturns.
Is the bucket strategy better than a fixed withdrawal rate?
Neither is universally better — the bucket approach is popular partly for its psychological benefit (a visible cash cushion), while a fixed withdrawal rate is simpler to implement and track.
