What happens if you retire and the share market falls just as you start drawing on your savings? On the Australian Retirement Podcast, Owen Rask and Tahli Cavagnino unpack the three-bucket retirement strategy: a way to think about spending now, keeping a reserve and investing for a longer retirement.
They begin with the shift from earning a salary to relying on a portfolio. Tahli explains sequencing risk: selling investments to meet living costs during a market downturn can make a recovery harder. The first bucket covers near-term spending needs, often with a cash buffer. But holding too much in cash can bring its own risks, including inflation and missed long-term growth.
The second bucket is the defensive reserve, where bonds and other income-focused assets may help support the cash bucket. The third is for longer-term growth, commonly including shares. Owen and Tahli work through a hypothetical couple’s retirement spending to show how the buckets interact, when they might be topped up and why a poor market year requires a different response from a strong one.
This is not a set-and-forget formula. The hosts discuss how to review and rebalance, what happens if bonds and shares fall together, and the trade-offs for people managing their own super. They also explain why a bucket strategy may be possible within an industry fund without opening multiple accounts, although the options and effort required vary.
If you are approaching retirement or already drawing an income, this conversation offers a clearer framework for the questions to take to your super fund or financial adviser — and a reminder that peace of mind matters alongside the numbers.
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