Retirement is not the end of investing, it’s the start of a new investment phase. With lifespans stretching into the 90s, most retirees will spend 25–30 years in retirement. That means your portfolio still needs to grow to outpace inflation, even while paying you an income.
1. The Bucket Strategy
A proven approach to balance growth and safety is the “bucket strategy.” It divides your retirement savings into time horizons:
- Bucket 1: Short-Term (0–3 years)
- Cash, deposits, short-term bonds.
- Covers daily living and avoids selling assets in a downturn.
- Bucket 2: Medium-Term (3–10 years)
- Balanced funds, diversified bonds.
- Provides modest growth and stability.
- Bucket 3: Long-Term (10+ years)
- Equities, property funds, global diversified assets.
- Designed to beat inflation over decades.
Example – Kate’s ARF Buckets
Kate, 66, with €450,000 ARF:
- €50,000 in cash (covering two years of spending).
- €150,000 in balanced funds (medium-term).
- €250,000 in equities (long-term).
She withdraws €25,000/year from cash. Every 2 years, she rebalances by topping up the cash bucket from growth assets.
Result: Kate avoids selling equities during downturns, protecting her long-term pot.
2. Diversification Matters
- Spread across asset classes: equities, bonds, property, alternatives.
- Diversify geographically: Europe, US, Asia, emerging markets.
- Split between different investment managers
Key Takeaway
The right strategy balances safety for today with growth for tomorrow. Without growth, inflation erodes purchasing power. With too much risk, you could face market-driven shocks.
