Bucket Strategy Withdrawal Calculator
Size the three buckets of a retirement bucket strategy — cash, bonds and stocks — from your annual spending and portfolio.
How it works
Bucket 1 = spending · cash years · Bucket 2 = spending · bond years · Bucket 3 = portfolio − Bucket 1 − Bucket 2
The bucket strategy divides a retirement portfolio by when the money is needed. Bucket 1 holds a couple of years of spending in cash so you never sell in a downturn; Bucket 2 holds several more years in bonds; Bucket 3 is everything else in stocks, left to grow and refill the near-term buckets over time. Sizing the first two buckets from your actual spending tells you exactly how long a market slump you could ride out without touching stocks.
Worked example
On a $1,000,000 portfolio spending $50,000 a year, two years of cash is $100,000 and five years of bonds is $250,000 — $350,000, or seven years of spending, protected. The remaining $650,000 (65%) stays in stocks for growth.
Frequently asked questions
How many years should the cash bucket hold?
Commonly one to three years of spending. Enough to avoid selling stocks during a typical downturn, but not so much that a large cash pile drags on long-term growth. Two years is a frequent starting point.
How do the buckets get refilled?
Periodically — often annually — you sell from Bucket 3 (stocks) after good years, or draw on bonds after bad ones, to top the cash bucket back up. The refilling discipline is what lets the stock bucket stay invested through volatility.
Is the bucket strategy better than a fixed withdrawal rate?
It is more about behavior than math — research shows returns are similar to a simple rebalanced portfolio, but the buckets make it psychologically easier to stay invested in a crash because your near-term spending is visibly safe. That behavioral edge is the real benefit.
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Educational estimate, not investment or tax advice.