Bucket Strategy Calculator
Use this free bucket strategy calculator to split a retirement corpus into three buckets and see how many years of expenses stay outside equity, even in a market fall. Enter your corpus, your expenses, the years of cover in each bucket and the returns you assume, and compare the strategy with a single portfolio of the same overall mix.
How this bucket strategy calculator works
Bucket 1 holds the next few years of expenses in cash and liquid funds. Bucket 2 holds the years after that in debt and hybrid funds. Bucket 3 holds the rest in equity. Monthly expenses are paid from Bucket 1. At the end of each year, Bucket 1 is refilled from Bucket 2, and Bucket 2 is refilled from equity, but only when the market is at or above its earlier high, so equity is not sold in a fall. If both buckets run dry, equity is sold, and the calculator counts it. The strategy is compared with a single portfolio that holds the same overall mix, is rebalanced every year, and pays its expenses from all of its parts. For example, a corpus of ₹1.5 crore with ₹6 lakh of yearly expenses, inflation of 6%, 2 years in Bucket 1 and 5 years in Bucket 2 gives buckets of about ₹12.4 lakh, ₹38.0 lakh and ₹99.6 lakh. The result is an illustration, not a forecast.
What the result shows
With 30% falls starting after year 3 and repeating every 8 years, the bucket strategy never held fewer than 4.2 years of expenses outside equity, against 1.6 years for the single portfolio, and it sold no equity while the market was below its earlier high. The single portfolio sold about ₹1.08 crore of equity during falls. The price of that comfort is lower growth: after 30 years the bucket strategy ends with about ₹1.46 crore, against about ₹1.71 crore, because more of its money sits in lower-return assets. Whether that trade suits a client depends on how much they value not having to sell in a fall.
What the strategy does not do
It does not remove market risk, and it does not make a corpus last longer on its own. It decides where the money for expenses comes from, and it works only while the first two buckets last. A long fall, or expenses that are too high for the corpus, can empty the buckets, and the calculator shows when that happens. Try a 50% fall that lasts for several years, or a larger yearly expense, to see the limits.
What this calculator does not include
Taxes, exit loads and costs are not included, including the tax effect of moving money from one bucket to another. The first two buckets earn the steady returns you enter, while real liquid, debt and hybrid funds also carry some risk and vary in return. Real markets are less regular than the falls shown. This is a way of exploring how a strategy behaves, not a promise that it will do better, and not a recommendation.
अक्सर पूछे जाने वाले सवाल (FAQs)
What is a bucket strategy?
It is a way of organising a retirement corpus into parts that are used at different times: the nearest expenses in the safest assets, the middle years in debt and hybrid funds, and long-term money in equity.
How many years should each bucket hold?
Many planners use one to three years in the first bucket and four to seven in the second, but there is no single rule. The calculator starts with 2 and 5. Try other values and see how the lowest years of cover change.
When are the buckets refilled?
At the end of each year. Bucket 1 is topped up from Bucket 2, and Bucket 2 from equity, but only when the market is at or above its earlier high. In a fall, the buckets are left to run down instead, and equity is sold only if both are empty.
How is this different from an SWP?
An SWP draws from one fund. This strategy uses three, so that expenses are paid from the safer ones. See our SWP calculator, and test a plan against the ups and downs of markets with our Retirement Monte Carlo calculator.
Is the return shown guaranteed?
No. Mutual fund returns are market-linked and can be higher or lower than the rates you enter. Mutual fund investments are subject to market risks. Read all scheme related documents carefully. Learn more on the AMFI investor awareness site.
Is my information saved?
The calculations run in your browser. The figures you enter are not sent to us or stored unless you choose to send them, for example by using the WhatsApp button.