Fill The Three-Buckets For Your Peaceful Retirement

Jun 2025 - 5 mins read

Imagine living in a place where people routinely live well into their 90s and beyond, enjoying long, healthy, and fulfilling lives. Such regions, known as Blue Zones, exist in reality and in places like Okinawa (Japan), Sardinia (Italy), the Nicoya Peninsula (Costa Rica), Icaria (Greece), and Loma Linda (California). Recently, Singapore joined this exclusive list, proving that adopting healthy practices can significantly extend life expectancy.

As medical advancements and a greater focus on self-care become the norm, it’s not far-fetched to imagine a future where living beyond 100 becomes common. While the prospect of a longer, healthier life is undoubtedly exciting, it also brings new challenges—particularly in financial planning. If lifespans continue to increase, it’s essential to rethink how we plan for retirement.

Imagine dividing a 100-year life into three broad phases. The first phase would be the initial 25 years dedicated to learning and skill-building, followed by around 35 years of working and accumulating wealth. Then comes the final phase—retirement—which could easily extend to 40 years or more. This means that instead of the traditional two or three decades of retirement, we may need to plan for nearly four. It’s an overwhelming thought, but living comfortably through this phase is possible with a thoughtful approach.

One such approach is the ‘Three-Bucket Strategy’, designed to try and extend a steady income throughout retirement by dividing the retirement corpus into three distinct buckets and how long the withdrawals from each bucket lasts depends on the withdrawal amounts.

The first bucket focuses on, investments which are conservative, prioritizing safety and liquidity to ensure that money is readily available whenever needed, with the least volatility. Assuming the withdrawals from this bucket lasts for 4- 7 years.

The second bucket is meant for, a balanced mix of debt and equities helps generate moderate growth while keeping pace with inflation. This bucket gets the benefit of being undisturbed for the first 3-5 years of retirement helping it to build some momentum to help with withdrawals in the second phase. And assume this bucket lasts for another 7-9 years.

Finally, the third bucket is designed for the long haul, the focus shifts to high-growth assets like equities, with the understanding that these investments have time to ride out any market fluctuations and has an average of 15 years or so to compound the corpus left to help with income withdrawals over a longer time frame. We assume the money from this bucket should last for another 11- 16 years.

To see how this strategy works in practice: Let’s consider the case of Mr. A, who plans to retire at 60 with a corpus of ₹2 crores and a monthly expense of ₹1 lakh, factoring in an inflation rate of 6%. He allocates his retirement savings equally among the three buckets—conservative hybrids (7% rate of return), aggressive hybrids (10% rate of return), and equities (12% rate of return)

With the 3 bucket investments, how long will your corpus last?

Bucket Investments	Expected returns per annum*	Allocation %	No of years withdrawal from each bucket will last
Bucket 1-Conservative hybrid assets	7%	33.30%	5.7 years
Bucket 2-Aggressive hybrid assets	10%	33.30%	7.5 years
Bucket 3-Equity assets	12%	33.30%	18.2 years
Total			31.4 years

Take Mr. A’s case. He retires at 60 with a corpus of ₹2 crore. The immediate bucket takes care of his monthly expenses for the first 5.7 years, the intermediate bucket supports him for the next 7.5 years, and the long-term bucket ensures financial security for the remaining 18.2 years Remarkably, even if he lives to be, his money can last for 31.4 years after he retires.That means his investments could support him until age 91.4 years.

But imagine what if he started earlier with a smaller corpus? Here’s how the picture changes:

Age at Retirement of Mr A	Corpus	Monthly Income Withdrawal	Money Lasts After Retirement for
50	1 Cr	Rs 60,000	21.7 Years
55	1.5Cr	Rs 80,000	27.2 Years
60	2 Cr	Rs, 1,00,000	31.4 Years

Interesting, Isn’t it?

However, I am sure, The true spirit of FIRE (Financial Independence, Retire Early) isn't about escaping work altogether—it's about retiring from what drains you so you can pursue what drives you. It’s a shift from working for a paycheck to working for purpose.

Imagine stepping away from your primary job in your 40s or 50s and starting something you genuinely love—be it teaching music, running a small sustainable farm, or writing part-time—and earning even a modest say between Rs 10,000- Rs 30,000 a month maybe and you invest this every month to equities, over next 10 years after you decide to retire, the power of compounding quietly does its magic in the background. It could last for more than 25 years, we believe. See how:

Age at Retirement of Mr A	Corpus At Retirement	Monthly Income Withdrawal	Money Lasts After Retirement for	Gig income is 10,000 for next 10 years	Gig income is 20,000 for next 10 years	Gig income is 30,000 for next 10 years
50	1 Cr	Rs 60,000	21.7 Years	26.5 Years	33.1 Years	43.3 Years
55	1.5 Cr	Rs 80,000	27.2 Years	32.1 Years	38.7 Years	49.3 Years
60	2 Cr	Rs, 1,00,000	31.4 Years	36.6 Years	43 Years	53.8 Years

*figures may vary if the monthly income withdrawal after retirement changes.

So, say if the Mr, A decides to retire early but have been earning a modest, somewhere between 10k to 30K a month, consistently invest in equities for another 10 years after he decides to retire. His money can last beyond 25 - 50 years depending upon how much he earns per month from as a gig income.

Thus, we believe that FIRE isn’t about sitting still—it’s about staying lit with purpose, while letting your money work just as relentlessly in the background.

This 3 bucket strategy works beautifully by balancing market volatility with the need for consistent income, guiding retirees to categorize their assets into safety, income, and growth. And by adopting a disciplined approach of withdrawing from one bucket at a time, retirees can ensure their money lasts as long as they do and if they add the color of income then it can lead their money to last way beyond they last in this world, leaving a fair amount of financial legacy for their family.

At last, I would say with thoughtful planning and prudent investment, it’s possible to live a peaceful and fulfilling retirement, much like the vibrant, content lives seen in the Blue Zones of the world.

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