Setting an asset allocation and figuring out a mechanism for drawing cash flow from your portfolio is a daunting exercise. That's why the Bucket strategy can be so useful: It can help you visualize an appropriate portfolio structure based on your spending needs.
Starting with the amount you need to draw from your portfolio each year, you can then position your portfolio based on your expected spending horizon. Money for the next year or two should go in cash (Bucket 1), the only asset class where your principal is guaranteed. Assets for which you have a slightly longer horizon can go into high-quality bonds (Bucket 2), which have historically returned more than cash while holding principal fairly steady for time horizons of five years or longer. The remaining assets can go into stocks and other higher-risk/higher-returning assets (Bucket 3).