BUCKET YOUR WORRIES AWAY

Once you have accumulated a decent corpus in your working life, the next big task should be to smartly deploy it across different schemes through a bucketing strategy so that your regular expenses are taken care of while your corpus keeps growing. This will ensure that you do not outlive your corpus

- Sanjeeb Baruah

For those who retire with a sizeable corpus, it’s very easy to get tempted into spending it on fulfilling some of their dreams—travelling around the world, buying a bungalow, acquiring a lavish lifestyle, and so on. But it would be wrong to assume that just because the sum seems large, the struggles are over, and one can retire in style.

To accumulate a sizeable corpus is like solving only one part of the puzzle. The other part is about deploying the savings in a way that it lasts a lifetime, while allowing you to pursue hobbies you could not take time out for during your working life.

If you don’t do the calculations right at the beginning, you stand the risk of outliving your savings. To be really able to retire peacefully, you will need regular cash flow, while also ensuring that your corpus grows at the same time, so that you don’t fall short later. In other words, you will need to maintain the same rigour in money management in your retirement years as you did in the accumulation or investing phase.

One way to ensure that is to resort to the bucketing strategy, which is recommended by most financial planners. Says Lovaii Navlakhi, a Securities and Exchange Board of India (Sebi)-registered investment advisor and managing director (MD) and chief executive officer (CEO) of International Money Matters, a Bengaluru-based financial advisory firm, “Planning for retirement is filled with anxiety and uncertainty as you know that you do not have additional income to pump in to recover from any downside in your investments. Hence, it is prudent to have a multi-bucket strategy during this tenure.”

Let’s understand how bucketing strategy works and how you can use it effectively in your retirement years.