What is the Bucket Strategy Calculator?
A bucket strategy splits your retirement money according to roughly when you expect to need it.
You keep money for the next few years in cash, another chunk for the medium term in bonds, and leave the rest invested for longer-term growth.
The idea is simple: if markets have a bad year, you already have some near-term spending set aside rather than immediately needing to sell your longer-term investments.
The Bucket Strategy Calculator puts some numbers around that idea.
How does the calculator work?
Enter your retirement pot, how much you want to spend each year and any other income you expect, such as State Pension.
Then choose how many years of spending you want in cash and bonds. The calculator works out how much that would leave invested for longer-term growth and shows how the three buckets could change over time.
It also includes a simple refill rule. When cash gets low, money is moved from bonds first and then growth to top it back up.
Step 1: Add Your Retirement Spending
Enter your retirement pot, yearly spending and any State Pension or other income you want to include.
Step 2: Choose Your Buckets
Choose how many years of spending you want in cash and bonds, then adjust the growth assumptions if needed.
Step 3: See How the Plan Develops
See your starting split, cash runway, refills and year-by-year path, then try different bucket sizes to compare.
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Disclaimer: This calculator provides illustrative planning figures only. It is not financial, tax or investment advice. The bucket labels, refill rules and investment returns are deliberately simplified. Actual cash, bond and investment returns will vary and charges and tax can affect what you receive. Results are shown in today’s money using the assumptions you enter. They are not a guarantee of future income, investment returns or how long your retirement pot will last.
What your three retirement buckets are actually showing you
The important number is not whether your calculator says 10%, 30% or 60% should sit in a particular bucket. Start with the years instead. How much of your near-term spending do you want set aside, and how much money does that leave invested for later?
Your Cash Bucket
This is money set aside for the earlier years of retirement. The calculator sizes it from the amount you need from your pot each year and the number of cash years you choose.
Your Bond Bucket
This sits behind your cash. It covers the next stretch of spending and is also the first place the calculator looks when your cash bucket needs topping back up.
Bonds can still rise and fall in value. The calculator uses a simple fixed return rather than trying to predict what bond markets will actually do.
Your Growth Bucket
Once the cash and bond targets have been filled, everything left goes into the growth bucket.
This represents money intended for later in retirement, so it has longer to remain invested.
Your Cash Runway
Cash runway is simply how many years of spending from your retirement pot are covered by the opening cash bucket.
If you ask for three years but your pot is not large enough to fill all the buckets, the calculator may show a shorter runway.
What a Refill Means
You spend from cash first. When the cash bucket falls below the level you set, the calculator tries to fill it back towards your original cash target.
It takes that money from bonds first. If there is not enough there, it then uses the growth bucket.
State Pension and Other Income
You may not need your retirement pot to cover your entire lifestyle.
If you include State Pension or other income, the calculator subtracts that from your yearly spending before sizing the buckets.
The Year-by-Year Path
This shows the three buckets after each year’s spending, assumed growth and any refill.
Use it to understand how the mechanics work rather than treating each future balance as a prediction.
The Interesting Question Is How Much You Want Near at Hand
Holding more years in cash can make the next market fall easier to live with. But cash also has less opportunity for long-term investment growth under the calculator’s assumptions.
Hold less in cash and more stays invested, but you have a shorter buffer before the plan needs to draw from the other buckets.
What Could a Bucket Strategy Look Like?
These examples show why the split can look very different depending on how much needs to come from the retirement pot. Someone receiving State Pension may need much less sitting in their first few buckets than somebody funding their whole lifestyle from investments.
Helen, covering the next three years
Age 64 · £500,000 pot · £30,000 lifestyle · State Pension included
Helen wants £30,000 a year in today’s money, but her investments do not need to provide all of it. Once her State Pension is included, around £17,450 a year needs to come from the pot in this example.
- From the pot: about £17,450 a year
- Cash: about £52,400 · Bonds: about £122,200
- Growth: about £325,500 with three cash years and seven bond years
What Helen can test
Three cash years gives her roughly £52,400 set aside at the start. She can change that to two or five years and see exactly how much more or less would remain in the growth bucket.
Marcus, using a simple refill rule
Age 61 · £500,000 pot · £20,000 a year from the pot · Three cash years
Marcus starts with £60,000 in cash, representing three years of his £20,000 yearly spending from the pot. He sets the calculator to refill when cash falls below one year’s spending. On this particular illustration, the first refill happens in year three and comes from his bond bucket.
- Opening cash: £60,000 · bonds £140,000 · growth £300,000
- First refill in year three from the bond bucket
- Refills: 10 over 30 years in this illustration
What Marcus can test
He can move the refill threshold up or down and see how often the calculator needs to move money back into cash. The refill dates are illustrations, not predictions.
Aisha and Paul, with State Pension paying part of the bills
Both mid-60s · £360,000 pot · £24,000 lifestyle · State Pension included
Aisha and Paul want £24,000 a year, but around £12,500 is covered by State Pension in this example. That leaves a much smaller amount needing to come from their £360,000 pot. As a result, their starting cash and bond buckets are smaller and more of the pot remains available for later growth.
- Lifestyle: £24,000 a year · State Pension: about £12,500
- Cash: about £34,400
- Growth: about £268,400
What Aisha and Paul can test
Switch the State Pension offset off and the calculator has to fund the whole £24,000 from their investments. The difference shows why other retirement income matters when deciding how much cash to hold.
What is the Bucket Strategy Calculator?
The Bucket Strategy Calculator splits a retirement pot into cash for the near term, bonds for the middle years and investments for longer-term growth.
It then shows how spending and simple refills could move money between those buckets over time. Figures are illustrative only.
What is a retirement bucket strategy?
A bucket strategy splits your retirement money according to roughly when you expect to need it.
You might keep the next few years of spending in cash, another period in bonds and leave money needed much later invested for growth.
The idea is to have near-term spending available without immediately needing to sell longer-term investments when markets fall.
How does the calculator decide how much goes into cash?
It starts with the amount your retirement pot needs to provide each year.
If you need £20,000 from the pot and choose three cash years, the starting cash target is £60,000.
If there is not enough money to fill all three buckets, the calculator fills cash first, then bonds, with anything remaining going to growth.
How much cash should I hold in retirement?
There is no single number that is right for everyone.
The calculator defaults to three years so you have somewhere to start, but you can change it.
Try two, three and five years. Look at how much cash that actually means in pounds and how much it leaves available for longer-term growth.
How does the bond bucket work?
The bond bucket covers the period after your cash bucket.
It is also the first place the calculator takes money from when its simple refill rule says the cash bucket needs topping up.
Bonds are investments and their value can fall as well as rise. The calculator simplifies this by applying the real return assumption you enter.
What is the growth bucket?
The growth bucket is whatever remains after the calculator has allocated the starting cash and bond amounts.
It represents money intended for later in retirement and therefore potentially able to remain invested for longer.
The calculator does not recommend particular investments or funds.
When does the calculator refill the cash bucket?
You choose a refill threshold.
The default is to trigger a refill when cash falls below one year of spending from the pot.
The calculator then tries to top cash back towards your chosen cash target, using bonds first and growth second.
What does cash runway mean?
Cash runway is the number of years of spending from your pot represented by the opening cash bucket.
If you need £20,000 a year from the pot and hold £60,000 in cash, that represents three years of cash runway.
How does State Pension affect the bucket sizes?
State Pension or other income can reduce how much needs to come from your investments.
For example, if your lifestyle costs £30,000 a year and £12,000 is covered by other income, your pot needs to provide £18,000.
With three cash years, that would produce a £54,000 starting cash target rather than £90,000.
What happens if my retirement pot cannot fill all the buckets?
The calculator prioritises the near-term buckets.
Cash is filled first, then bonds, and anything left goes into growth.
If there is not enough to meet the targets you have chosen, the results will show that.
That can be useful in itself. Try reducing the number of cash or bond years, changing spending or adjusting other income and see what moves.
What does “pot runs out” mean here?
It is the first year in the calculator’s illustration where the remaining cash, bonds and growth cannot cover that year’s required withdrawal from the pot.
Do not read this as a promise that you will run out of money in a particular year.
The model uses simple fixed returns and cannot know what future markets, spending or your life will actually look like. Treat “pot runs out in this illustration” as a warning that the assumptions you entered do not complete the period being tested.
Does holding cash protect me from sequence risk?
Holding near-term spending in cash can reduce the need to sell longer-term investments immediately after a market fall.
But this calculator does not model the uneven sequence of actual market returns.
If you specifically want to explore what happens when poor returns arrive early in retirement, use the Lumpy Returns Calculator alongside this one.
Does the calculator include inflation?
The calculator works in real terms, meaning today’s purchasing power.
The return assumptions are therefore real returns after inflation rather than nominal investment returns with a separate inflation calculation.
Does it include tax?
No.
The calculator is about how a simple cash, bond and growth bucket structure might work.
It does not calculate Income Tax, pension withdrawal tax, Capital Gains Tax or the tax treatment of different accounts.
Is the Bucket Strategy Calculator financial advice?
No.
It is a planning illustration based on the pot, spending, income, bucket sizes and return assumptions you enter.
It does not recommend how much cash you personally should hold or which investments you should buy.
Trust and education
Certified Money First Aider®
These calculators are built by a Certified Money First Aider to help you think more clearly about money and time. Money First Aid® is about practical, non-judgemental support for financial wellbeing. The calculators can certainly help you make informed decisions, but they are not regulated financial advice.
Behind Retirement Calculators
Built from the questions I was asking myself
I'm Ryan, the person behind Retirement Calculators. I started the site after selling an online business and trying to understand what our pensions, ISAs, investments and property actually meant for the way we wanted to live.
The calculators are built around those real decisions: whether you could work less, retire earlier, spend more now or use your money differently. They will not give you a perfect answer, but they can make the trade-offs much easier to see.
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