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Investing Specialists

An Aggressive Retirement Portfolio in 3 Buckets

This stock-heavy portfolio is appropriate for retirees with long time horizons and ample risk tolerance.

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Thanks to the Federal Reserve's dramatic action in response to the COVID-19 crisis, yields have been pushed down across the board. That means that today's retirees may still have a tough time subsisting on yield alone. Some income-focused investors have ventured further onto the risk spectrum to generate a livable yield; a smaller segment has been sticking with safer sources of income but trying to make do on less. 

The Bucket approach to generating living expenses from a portfolio during retirement aims to meet those challenges head on. The basic strategy is that a retiree holds the bulk of her assets in a long-term portfolio that's diversified between stocks and bonds. She then augments it with a cash bucket that she uses for spending money and periodically refills that cash Bucket with income distributions, rebalancing proceeds, or both. 

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Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.