*Are the buckets all within qualified IRA etc?: No, it's a blend of Trad. IRA, ROTH and taxable.*Are they actually in separate accounts?: Bucket #3 is separated from Buckets #1 & #2 for simplicity. *How do you deal with RMDs?: We have not reached that esteemed age yet. When we do, the RMDs will be reinvested in the taxable portion of Bucket #3.*Are you affected by taxes upon re-balancing?: Only some minor capital gains when taking some Bucket #2 "overflow" due to equity index fund growth and using the proceeds to refill Bucket #1.
Dick, Correct on the "pools of money for specific periods"-which are invested and managed/allocated differently based on which time frame "bucket" the assets are in.
In our case (there are almost infinite versions out there): Bucket #1: Duration: 4 years + present year
Goal: stable- if it keeps pace with 3% inflation its a bonus Bucket #2: Duration: 7 years
Goal: keep pace with 3% inflation or beat it (excess when applicable goes to Bucket #1 refill). Bucket #3: Duration: indefinite/all core funding assumed to be at least 12 years from beginning to be spent at any point in time.
Goal: Beat 3% inflation over time. When over funded, bucket "overflow" is used to refill buckets 1/2. (In bad or flat years when not over funded, leave all assets invested in Bucket #3 and let the Bucket 1/2 12 year duration compress). >As noted previously, I balance within and between the "buckets" typically once per year.
>I can see shrinking the conservatively long 12 year Bucket 1/2 window as we age.
>The Bucket Strategy does not solve the under-spending dilemma. It does however give good visibility to and an annual reminder of the "problem".
We have never used nor plan to use any % spend rate in retirement.
Not that I am against it (although when people start debating to the decimal point it seems a bit pointlessly specific); I just never felt the need.
I employed a version of the "Bucket" strategy over 20 years ago which evolved over many years before retirement as the framework for our finances and establishing an inflation adjusted "salary" going forward into retirement. The "salary" is provided by the investment portfolio buckets alone-no annuities or pensions and if we ever see any Social Security $ it will be considered a bonus not an assumption.
Another benefit of the Bucket approach was it gave me a very visible glideslope into retirement. I could see very clearly when the "buckets runeth over" and I was able to retire if I wished. That was a very empowering feeling while I still worked a few more years by choice. Now in retirement, as long as our buckets line up in both present day $ and projected 3% inflation adjusted $; the "bucketized" portfolio spreadsheet is put back to sleep for another year.
The end result is basically the same as those who subscribe to the % method presumably have an annual "salary" figure too. Its just another angle of approach to the age old topic.
I’m with you David including on the taking SS at 70 for me as the higher earner and 67 for my spouse. The only point we diverge on is I’m opting for the cheapest paper tube for my ashes. If you go with the plastic one, make sure it’s reusable for the environment’s sake. 😇
While true you need a new PIN each year which as far as I know happens without any further action by you once you sign up. Unless our tax guy has been doing something annually that I’m not aware of to get us the new PINs, they have automatically been sent for years with no further action from us each year.
I agree and it is easy to do.I did this for myself years ago as part of a broader plan after a relatively minor (compared to most) but irritating identity theft event-that did not involve taxes. We subsequently did it for my wife as well.
Social media has democratized the ability for the ignorant to communicate on any topic.
The beauty is we still have the choice to largely avoid what they write and not empower them by engaging and or propagating.
Life is too short.
Mark, First of all thanks for your regular postings. You have become one of the authors I choose to click on with regularity.This is a nice, lighthearted approach to what can be a difficult topic.
I suppose I am a a Bogle disciple/Indexer at heart but have only been able to slowly unwind my individual equity holdings over the years. I am down to 12 now after accomplishing my goal of selling at least 2-3 equity holdings in entirely in the last few years and reinvesting the proceeds in Index Funds. I also have been "taking the cream off the top" of some of the individual equities that have done very well in this market to avoid them from becoming outsized holdings. I have the 2-3 individual equities picked out for this year's liquidation but have not acted quite yet. I have been tempted at times to purchase new equity ticker symbols but keeping my eye on the annual goal to incrementally reduce the number of individual equities held has served me well.
Once I realized that my only goal was to keep pace with inflation in my "drawdown" years, it made the decision to dial out most of my individual equities easier. I suspect I'll land on keeping maybe 3 long term,1 being in taxable account where I'll let my heirs benefit from the step up basis after I am gone.
Richard,
Expanding on your points if I may:
One of Jonathan's gifts was his ability to write relevant, often actionable prose in a selfless and humble manner.
I never got the impression in reading his column in WSJ all those years and through the Humble Dollar years that he expected nor wished that all would agree with what he wrote. He saw a higher purpose behind his writing-it was never about him.
Underscoring this view, if you look back at his postings in Humble Dollar, he had the "Executive Presence" in his approach to let others organically share their interpretations, views, personal experiences, etc. without feeling the need to opine further on what other people wrote in comments to his postings. In other words, it was never about him. In rare cases when he did add a comment to one of his own postings, it was to answer a question that no one else had yet answered or to correct/counter truly incorrect or misleading statements made by a commenter (or himself). His focus was on tangible, often analytical topics not semantics. Jonathan inherently knew that his humble, collaborative approach resulted in the best results for his readers.
Jonathan is truly missed but his example lives on for those who choose to follow it.
Great news, thanks for highlighting this, Bogdan. 30+ years with Vanguard and they have never given me a reason to leave. Their continued efforts to apply downward pressure on the investment industry gives me another reason to stay.
Comments
*Are the buckets all within qualified IRA etc?: No, it's a blend of Trad. IRA, ROTH and taxable. *Are they actually in separate accounts?: Bucket #3 is separated from Buckets #1 & #2 for simplicity. *How do you deal with RMDs?: We have not reached that esteemed age yet. When we do, the RMDs will be reinvested in the taxable portion of Bucket #3. *Are you affected by taxes upon re-balancing?: Only some minor capital gains when taking some Bucket #2 "overflow" due to equity index fund growth and using the proceeds to refill Bucket #1.
Post: Forget the 4% rule.
Link to comment from March 7, 2026
Dick, Correct on the "pools of money for specific periods"-which are invested and managed/allocated differently based on which time frame "bucket" the assets are in. In our case (there are almost infinite versions out there): Bucket #1: Duration: 4 years + present year Goal: stable- if it keeps pace with 3% inflation its a bonus Bucket #2: Duration: 7 years Goal: keep pace with 3% inflation or beat it (excess when applicable goes to Bucket #1 refill). Bucket #3: Duration: indefinite/all core funding assumed to be at least 12 years from beginning to be spent at any point in time. Goal: Beat 3% inflation over time. When over funded, bucket "overflow" is used to refill buckets 1/2. (In bad or flat years when not over funded, leave all assets invested in Bucket #3 and let the Bucket 1/2 12 year duration compress). >As noted previously, I balance within and between the "buckets" typically once per year. >I can see shrinking the conservatively long 12 year Bucket 1/2 window as we age. >The Bucket Strategy does not solve the under-spending dilemma. It does however give good visibility to and an annual reminder of the "problem".
Post: Forget the 4% rule.
Link to comment from March 7, 2026
We have never used nor plan to use any % spend rate in retirement. Not that I am against it (although when people start debating to the decimal point it seems a bit pointlessly specific); I just never felt the need. I employed a version of the "Bucket" strategy over 20 years ago which evolved over many years before retirement as the framework for our finances and establishing an inflation adjusted "salary" going forward into retirement. The "salary" is provided by the investment portfolio buckets alone-no annuities or pensions and if we ever see any Social Security $ it will be considered a bonus not an assumption. Another benefit of the Bucket approach was it gave me a very visible glideslope into retirement. I could see very clearly when the "buckets runeth over" and I was able to retire if I wished. That was a very empowering feeling while I still worked a few more years by choice. Now in retirement, as long as our buckets line up in both present day $ and projected 3% inflation adjusted $; the "bucketized" portfolio spreadsheet is put back to sleep for another year. The end result is basically the same as those who subscribe to the % method presumably have an annual "salary" figure too. Its just another angle of approach to the age old topic.
Post: Forget the 4% rule.
Link to comment from March 6, 2026
I’m with you David including on the taking SS at 70 for me as the higher earner and 67 for my spouse. The only point we diverge on is I’m opting for the cheapest paper tube for my ashes. If you go with the plastic one, make sure it’s reusable for the environment’s sake. 😇
Post: The $9.95 scam…
Link to comment from February 28, 2026
While true you need a new PIN each year which as far as I know happens without any further action by you once you sign up. Unless our tax guy has been doing something annually that I’m not aware of to get us the new PINs, they have automatically been sent for years with no further action from us each year.
Post: A PIN to protect your tax return
Link to comment from February 28, 2026
I agree and it is easy to do.I did this for myself years ago as part of a broader plan after a relatively minor (compared to most) but irritating identity theft event-that did not involve taxes. We subsequently did it for my wife as well.
Post: A PIN to protect your tax return
Link to comment from February 27, 2026
Social media has democratized the ability for the ignorant to communicate on any topic. The beauty is we still have the choice to largely avoid what they write and not empower them by engaging and or propagating. Life is too short.
Post: Need, yes. Deserve, no! Who “deserves” more?
Link to comment from February 24, 2026
Mark, First of all thanks for your regular postings. You have become one of the authors I choose to click on with regularity.This is a nice, lighthearted approach to what can be a difficult topic. I suppose I am a a Bogle disciple/Indexer at heart but have only been able to slowly unwind my individual equity holdings over the years. I am down to 12 now after accomplishing my goal of selling at least 2-3 equity holdings in entirely in the last few years and reinvesting the proceeds in Index Funds. I also have been "taking the cream off the top" of some of the individual equities that have done very well in this market to avoid them from becoming outsized holdings. I have the 2-3 individual equities picked out for this year's liquidation but have not acted quite yet. I have been tempted at times to purchase new equity ticker symbols but keeping my eye on the annual goal to incrementally reduce the number of individual equities held has served me well. Once I realized that my only goal was to keep pace with inflation in my "drawdown" years, it made the decision to dial out most of my individual equities easier. I suspect I'll land on keeping maybe 3 long term,1 being in taxable account where I'll let my heirs benefit from the step up basis after I am gone.
Post: A Very Sensible Conclusion
Link to comment from February 19, 2026
Richard, Expanding on your points if I may: One of Jonathan's gifts was his ability to write relevant, often actionable prose in a selfless and humble manner. I never got the impression in reading his column in WSJ all those years and through the Humble Dollar years that he expected nor wished that all would agree with what he wrote. He saw a higher purpose behind his writing-it was never about him. Underscoring this view, if you look back at his postings in Humble Dollar, he had the "Executive Presence" in his approach to let others organically share their interpretations, views, personal experiences, etc. without feeling the need to opine further on what other people wrote in comments to his postings. In other words, it was never about him. In rare cases when he did add a comment to one of his own postings, it was to answer a question that no one else had yet answered or to correct/counter truly incorrect or misleading statements made by a commenter (or himself). His focus was on tangible, often analytical topics not semantics. Jonathan inherently knew that his humble, collaborative approach resulted in the best results for his readers. Jonathan is truly missed but his example lives on for those who choose to follow it.
Post: If you have done well, be proud.
Link to comment from February 19, 2026
Great news, thanks for highlighting this, Bogdan. 30+ years with Vanguard and they have never given me a reason to leave. Their continued efforts to apply downward pressure on the investment industry gives me another reason to stay.
Post: Vanguard Funds Fee Cut
Link to comment from February 4, 2026