Bucket Strategy
Dividing retirement savings into short-, medium- and long-term buckets to manage risk.
The bucket strategy splits a retirement portfolio into segments by time horizon — for example cash for near-term spending, bonds for the medium term and stocks for the long term. Holding safe assets for near-term needs helps a retiree avoid selling stocks during downturns.
Examples
- Keeping two years of expenses in cash lets you ride out a market slump without selling.