![]() The remainder of the portfolio is invested in stocks and a high-risk bond fund. What's left over is the amount of cash flow that the portfolio will need to supply each year (in other words, the desired withdrawal amount, including income, capital gains, and outright withdrawals).Īnywhere from six months' to two years' worth of living expenses–not covered by Social Security–are housed in cash instruments (Bucket 1), and another 8-10 years' worth of living expenses are housed in bonds (Bucket 2). To construct a retirement Bucket portfolio, the retiree starts with anticipated income needs for a given year, then subtracts certain sources of income like Social Security and a pension. ![]() A retiree shouldn't be overly rattled during periods of short-term market turbulence because near-term spending will be relatively undisturbed, and the rest of the investment portfolio can recover when the market eventually does. The goal of having buffers like these is in no small part peace of mind. ![]() Investment Portfolio Examples for Retireesīenz's Bucket Portfolios for retirees include a built-in stabilizer for turbulent times–cash reserves that retirees can draw upon when yields are insufficient to meet living expenses and it's not a good time to disturb stocks. ![]()
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