The “New” Retirement Strategy That’s Been Working All Along

Not long ago, I received an email from a well-known financial firm with the bold subject line: “[Name] Shares a New Retirement Strategy.”

Naturally, my curiosity was piqued. Who doesn’t want to learn a new way to make retirement income more reliable?

But as I read on, I smiled. The ‘new’ idea being introduced was something we’ve used at Fourth Dimension Financial Group since day one: bucketing.

It may sound trendy again, but the truth is that bucketing, which is sometimes called age-banding, has been an enduring, time-tested way to bring structure, confidence, and clarity to retirement income. If there’s ever a time to revisit it, it’s now.

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What Exactly Is Bucketing?

At its core, bucketing is simply organizing your retirement savings by time and purpose. You divide your nest egg into different ‘buckets’, each with a specific job and investment approach.

A classic model uses three or four buckets:

Bucket 1: Money for the first five years of retirement.
Bucket 2: Money for years six through ten.
Bucket 3: Money for year eleven and beyond.
Bucket 4: Money for family legacy.

Each bucket is invested differently depending on when you’ll need it. The first bucket holds conservative, highly liquid assets like cash, short-term bonds, or even annuities designed to provide immediate income. The second and third buckets can take on gradually more risk or include longer-term investments, since they won’t be touched for years.

The beauty of this structure is psychological as much as financial: you know where your income will come from in the near term, and you know the rest of your assets have time to grow back if markets dip. That peace of mind can be priceless.

Why Bucketing Works

Most retirees don’t think of themselves as risk takers, but nearly every retirement plan carries sequence-of-returns risk, which is the danger that poor market performance early in retirement can derail decades of planning.

Bucketing helps defend against that risk. Because your near-term income is coming from safer assets in Bucket 1, you’re not forced to sell growth investments at a loss during a downturn. Your long-term money stays invested and can recover before you need it.

In short, bucketing allows you to match time horizons with investment risk. You’re not trying to predict the markets, you’re aligning your money with your life.

A Safety-First Structure with Built-In Flexibility

One of the strengths of bucketing is that it breaks your long retirement horizon into smaller, more manageable segments. If the markets change - or if your goals do - you can adjust one bucket at a time rather than re-engineering your entire plan.

There’s no single ‘recipe’ for funding your buckets. Some retirees prefer a mix of investments that gradually get more growth-oriented in later buckets. Others choose more guaranteed paths, such as a 5-year income annuity for Bucket 1, another for Bucket 2, and a lifetime income annuity for Bucket 3 that ensures guaranteed income for life.

Either way, you maintain flexibility and optionality: if you or your spouse pass away before turning on income from later buckets, remaining balances can pass to your heirs.

And What About the Rest of Your Money?

Once your essential income is covered by your buckets, the pressure lifts. Any extra assets - your discretionary investments - can stay at risk in the markets for things like travel, gifting, long-term care needs, or legacy goals. Because your income is already spoken for, you can think longer-term and worry less about short-term market movements.

That’s one of the quiet superpowers of bucketing: it allows you to enjoy both predictability and freedom.

Are There Downsides?

The bucketing approach can be more complex than a single ‘all-in-one’ income product. It also requires access to a broad range of investments and insurance options, which is something not every advisor can offer. A dually-licensed advisor who understands both guaranteed income tools and market-based investments is best positioned to build it effectively.

But for most retirees seeking a balance between income stability and flexibility, the tradeoff is worth it.

Who Benefits Most from Bucketing?

This approach tends to fit retirees who:

Want to minimize risks like market swings, poor timing, or outliving their savings.
Value steady, predictable income but still want room for growth.
Are comfortable blending traditional investments with income-guaranteed products.
Appreciate a structured, step-by-step plan that adapts as life changes.

Old Wisdom, New Relevance

In a world of fast-changing markets and ever-longer retirements, the simplicity of bucketing feels refreshingly steady. It’s not flashy, not ‘new’, and that’s exactly why it works.

While others may rediscover it and call it revolutionary, we’ve always seen it as common sense: build income security first, keep flexibility second, and let time work in your favor.

Sometimes, the best “new” ideas are simply the proven ones that never stopped working.