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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. 

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