Planning & Investing Putting the bucket strategy for retirement into practice

July 29, 2025

In our last “Simplifying retirement income” story, we wrote about the bucket system: a quick and easy framework for financial professionals and clients to visualize and manage spending in retirement. To recap: Retirement savings are allocated to different financial “buckets” based on when clients expect to need them for immediate, short-, medium- or long-term spending. Those buckets are then aligned with different investing strategies, with the most growth-oriented investments being put in the buckets with the longest time horizon, and the more immediate needs allocated to cash. Over time, regular rebalancing helps to move a portion of each bucket to fill the one below it. In short, it’s structured to help investors not only manage their spending but avoid market anxiety when markets fluctuate.

 

In their Capital Ideas article, “The bucket approach to retirement income,” Senior Retirement Income Strategist Kate Beattie, CFP, RICP, and Senior Wealth Planning Manager Aaron Peterson, CFP, note the strategy’s adaptability. The number of buckets, what they represent and whether assets are bucketed by a block of time or specific funding goal, for example, are all variable.

 

We interviewed financial professionals Joe Schoenhardt and Jim Hinchsliff on our PracticeLab podcast in 2021 about the approach their firm, Infinity Financial Concepts, takes to the system. They use a time-release model with buckets of spending apportioned depending on the expected time in retirement. Over 25 years, for example, they would look to fund roughly five broad buckets – and then rebalance over time.  

Example bucket drawdown strategy in retirement

Timeline graphic shows five buckets spanning 25 years of retirement. Bucket one represents 0 to 3 years and holds cash. Bucket two represents 3 to 7 years and holds conservative investments. Bucket three represents 7 to 13 years and holds growth and income investments. Bucket four represents 13 to 19 years and holds growth investments. Bucket five represents 19 to 25 years and holds global growth and small-cap investments. This chart is for illustrative purposes only. Actual time periods and allocations will be based on time in retirement and the investors’ objectives.

Source: Capital Group, Infinity Financial Concepts

That breaks down to roughly:

 

0-3 years: Cash.

 

3-7 years: Conservative assets.

 

7-13 years: Growth and income investments.

 

13-19 years: Growth.

 

19-25 years: Global growth and small-cap investments.

 

Schoenhardt explains that the buckets help clients distinguish today’s funds from those that will be used later. “They understand that the money that's going to fluctuate the most is money they're not going to spend for 15 or 20 years,” he says. If clients think everything is in one big pot, they may panic. With buckets, they may not like when the market is down, but they understand the funds in some buckets won’t be touched for years and may be less likely to worry.

 

Ready to put it into practice? Beattie and Peterson have some suggestions:

 

  • Set your strategy: Decide how many buckets you need, what they represent and, if time-related, their length.

  • Educate clients: Get clients to buy-in and market to a wider audience. Consider educational seminars.

  • Fund the buckets: Consider clients’ sources of assets and their taxability.

  • Maintain over time: Determine how the lower buckets will replenish once depleted, stay on top of rebalancing and find opportunities to harvest gains when the markets are up.

 

Read more retirement income insights here

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