Bucket Retirement Strategy Calculator

The arithmetic here is one multiplication done three times, so the sum is not the interesting part. The three-bucket approach separates a retirement pot by when the money will be spent, so a bad year in the growth bucket does not have to be met by selling out of it. In aggregate it is the same portfolio either way. What changes is which bucket the next withdrawal comes from.

How to use it

Enter the total pot and a percentage for each of the three buckets. The three always total 100, and the page keeps them there: drag one share and the other two give up the difference in proportion to what they already held, with a note naming which moved. Raising cash from 15% to 25% on the defaults leaves bonds at 31% and equities at 44%. The equity bucket is reported as the headline figure, with cash and bonds beneath it.

What the result means

Each bucket is the pot multiplied by its own percentage, and each one is associated with a time horizon rather than a product: cash against roughly the first one to two years of spending, bonds or other conservative holdings against the next several, and equities against what is left beyond that. The horizons are the reason for the split. The asset allocation material published by the US Securities and Exchange Commission sets out how time horizon and allocation relate more generally.

When to rebalance

The mechanic the strategy depends on is not selling from the growth bucket during a downturn, which is the opposite of what a single undifferentiated pot tends to force. Refilling the cash bucket out of the other two after a strong year, and leaving it to run down after a weak one, is the version most descriptions of the approach set out. The SEC's guide to asset allocation, diversification and rebalancing covers the general case, including why any rebalancing rule has costs of its own.

The defaults, worked through

At 600,000 split 15/35/50 the calculator reports 300,000.00 in the equity bucket, 210,000 in bonds and 90,000 in cash. Those defaults are a starting point for seeing the arithmetic, not a suggested allocation; the percentages that suit one person's circumstances are not derivable from a calculator.

What moves each bucket

Every bucket is linear in both of its terms, which makes the levers unusually simple. Double the pot and all three amounts double while the percentages hold. Move a percentage by one point and that bucket moves by one percent of the pot, which is 6,000 at the defaults, regardless of which bucket it is.

The constraint is what makes it interesting, and the page enforces it rather than leaving it to the reader. Because the three shares total 100, no percentage moves on its own: a point added to equities is taken from cash and bonds in proportion to what they held. That is the trade the calculator is really showing. Every allocation decision here is a transfer, never an increase.

How the math works

Bucket amount = pot x bucket percentage / 100, applied three times, with a check that the three percentages sum to 100 within a hundredth of a point. Dragging a share on the page rebalances the other two automatically, so that check normally passes without the reader seeing it; it bites on a link that carries a share in the query string, since deep-linked values are range-checked but not rebalanced. There are no returns, no inflation and no withdrawals in the model. It converts an allocation into amounts and stops there.

Turning the result into a plan

The output is a snapshot of one allocation, so its use is comparative rather than predictive. Running several splits against the same pot shows what each one costs the others, which is the question the sum-to-100 constraint keeps raising.

What the figures cannot answer is how long any bucket lasts, because spending is not an input here. A cash bucket of 90,000 is four and a half years of spending at 20,000 a year and two and a quarter at 40,000, and the calculator sees neither figure. A separate runway calculation is what covers that question.