Archive · 10 Sep 2026
Three-Bucket Retirement Strategy Targets Income, Goals and Growth
Retirement savings need to support you after your salary stops.
A three-bucket strategy separates your money according to when you will need it.
The first bucket pays for everyday needs and healthcare.
The second bucket is for things such as travel or home improvements.
The third bucket is for goals that may be many years away, such as leaving money to family.
Keeping money for near-term expenses separate can reduce the need to sell investments during a market crash.
Different expenses may rise at different speeds, so healthcare costs need special attention.
The right amount in each bucket depends on your income, expenses, goals and comfort with risk.
You should review the buckets regularly because your circumstances and markets can change.
The three-bucket approach divides retirement savings by immediate, medium-term and long-term needs.
The first bucket covers essential expenses such as household costs, healthcare and medical bills, with liquidity a priority.
The second bucket funds lifestyle goals such as travel, vehicle purchases and home renovations.
The third bucket supports long-term objectives, including corpus growth, legacy planning and generational wealth.
Allocations should reflect expenses, inflation, income, risk tolerance and time horizons rather than follow a fixed formula.
- Who
- Retirees and investors managing retirement savings; Rajan Sarkar of Anand Rathi Wealth Limited provides the cited guidance.
- What
- A three-bucket investment strategy organizes a retirement corpus for immediate expenses, medium-term lifestyle needs and long-term goals.
- When
- During retirement and over the potentially two- or three-decade retirement period; the buckets should be reviewed periodically.
- Where
- The article does not specify a location.
- Why
- To match investments with time horizons and liquidity needs, support regular income and reduce pressure to sell growth assets during market downturns.
- First bucket
- For essential and regular expenses, including household costs, healthcare and medical needs.
- Second bucket
- For medium-term lifestyle expenses such as travel, vehicle purchases and home renovation.
- Third bucket
- For long-term goals such as growing the corpus, leaving a legacy or creating generational wealth.
- Illustrative allocations
- Rajan Sarkar suggested around 60:40 equity-to-debt for the near-term bucket, 70:30 for the medium-term bucket and 80:20 for the long-term bucket.
- Inflation assumptions
- Healthcare costs were cited as rising around 9–10%, while medium-term lifestyle expenses could use an assumption of around 7–8%, depending on the expense.
- Withdrawal approach
- One year of expected expenses may be shifted from equity to debt before each year, with monthly withdrawals made from the debt portion.
- Potential investments
- Examples include diversified equity mutual funds, debt mutual funds, fixed deposits, liquid funds and, in suitable circumstances, arbitrage funds.