Retirement Details
Bucket Settings
Bucket 3 receives the remainder in equities for long-term growth.
Income Gap Analysis
Your Three Buckets
Refill Schedule
Frequently Asked Questions
What is the retirement bucket strategy?
The bucket strategy divides retirement savings into three pools: Bucket 1 (cash for 1–3 years of spending), Bucket 2 (bonds/balanced funds for years 4–10), and Bucket 3 (equities for 10+ years). This allows long-term growth while ensuring short-term needs are met without selling equities during downturns.
Can I use my ISA as Bucket 1?
Yes, a Stocks and Shares ISA or Cash ISA is ideal for Bucket 1. ISA withdrawals are completely tax-free and flexible, making them perfect for meeting near-term spending needs without selling equities in a downturn.
How does the bucket strategy work with SIPP drawdown?
With SIPP drawdown, keep Bucket 1 in cash within the SIPP or in a Cash ISA, Bucket 2 in bond funds within the SIPP, and Bucket 3 in global equity funds. Refill Bucket 1 annually from Bucket 2 returns or dividends.
How often should I refill the buckets?
Review and refill annually. Refill Bucket 1 by taking income from Bucket 2 returns (dividends, coupon payments, or rebalancing). Only draw from Bucket 3 equities if Bucket 1 and 2 are depleted and markets are performing well.
What is the income gap in retirement?
The income gap is your total spending requirement minus guaranteed income (State Pension, DB pension, annuity). For example, spending £30,000/year with £11,502 State Pension means an income gap of £18,498 that your investment buckets must provide.