Once you retire, you shift from accumulating assets to spending them. The psychological transition from saving to withdrawing can be difficult. The Bucket Strategy addresses this by segmenting your retirement assets into three distinct 'buckets' based on when you will need to spend the cash.
Bucket 1 contains liquid cash to cover short-term expenses (1 to 2 years). Bucket 2 holds fixed-income assets and bonds for medium-term needs (3 to 7 years). Bucket 3 is dedicated to growth assets like equities or real estate for long-term compounding (8+ years).
During market corrections, you avoid selling equities because Bucket 1 and Bucket 2 supply your income, giving Bucket 3 time to recover. Periodically refill the shorter-term buckets during market upturns. Model this bucket flow inside your dashboard sandbox to secure your long-term retirement pipeline.