Bucket Strategy Calculator
You have a corpus and you want to retire on it. This splits it into three buckets - safety, income, growth - so a market crash never forces you to sell equity at the bottom, then walks the whole retirement year by year to see whether the structure actually holds. It also works out what tax you really pay, which for someone with no salary is usually far less than the 30% every other calculator assumes.
Everything below is carved out of this
What one month costs on day one
How long retirement has to last
6% is the India default
Carved out first, topped up from equity
Runs well above CPI
This structure lasts the full 40 years.
12 years of runway before equity is touched, and ₹81.62 Cr left at the end.
Bucket 1 · Safety
₹48.2 L
12% of corpus · years 1-4
Bucket 2 · Income
₹89.6 L
22% of corpus · years 5-12
Bucket 3 · Growth
₹2.42 Cr
61% of corpus · year 13 onward
Medical · Buffer
₹20.0 L
5% of corpus · ₹1.91 Cr topped up
How your corpus splits
34% defensive, 61% in equity
The buckets across 40 years
Buckets 1 and 2 run as one Safe pool. Dashed lines are the years Safe fell below 4 years and equity was sold to refill it.
When you actually sell equity
Spending always comes out of Safe. Equity is only ever sold on the years below, when Safe has run down to 4 years.
Your plan, in five lines
One approach that fits these numbers. Not advice, and not the only way to run it.
- 1
Set aside ₹1.38 Cr as Safe
12 years of spending. ₹48.2 L in FDs, liquid and arbitrage funds; ₹89.6 L in short-duration debt, corporate bond and hybrid funds.
- 2
Leave ₹2.42 Cr in equity and do not touch it
61% of your corpus, in index funds. On these numbers you first sell some of it in year 8.
- 3
Spend out of Safe, cheapest money first
Live off the FD and liquid sleeve until it is empty, then the debt and hybrid sleeve. The second one earns more, so it is worth leaving invested longer. Never sell equity to pay for groceries.
- 4
Go back to equity when Safe falls to 4 years
Sell enough to rebuild Safe to 12 years. On these numbers that is roughly once a decade, not annually.
- 5
Never selling more than half of equity at once
Then sell half of it and no more, and top Safe up again at the next trip. Safe still has 4 years in it, so there is time.
Plus the medical buffer. ₹20.0 L held apart from all of this, topped back up on the same trips to equity. It is not spending money.
Revisit the numbers every few years. Spending changes, tax rules change, and a plan set once at 45 and never looked at again is not a plan.
How this is calculated
Blended post-tax return
r_i = pre_tax_i × (1 − tax_i)
r = Σ (weight_i × r_i) / Σ weight_i
Each sleeve is taxed on its own terms. FD, RD, savings interest and liquid funds are slab-taxed - liquid funds lost indexation in April 2023 and are now treated like interest. Arbitrage and hybrid funds get 12.5% LTCG treatment. The weighted average of the post-tax rates is what the bucket actually earns.
The tax rate is solved, not assumed
rate = [tax(other + interest) − tax(other)] / interest
Once you stop working, the basic exemption and the 87A rebate sit unused, so ordinary income up to ₹12 lakh a year carries no tax at all. Charging bucket interest at a flat 30% overstates the defensive buckets. New-regime slabs for FY 2025-26, with marginal relief and 4% cess. There is a loop here - bucket size sets the interest, the interest sets the rate, the rate sets the bucket size - so it iterates to a fixed point.
Buckets 2 and 3
B₂ = E × k^N₁ × (1 − k^N₂) / (1 − k)
B₃ = corpus − B₁ − B₂
Bucket 2 is the same present value as bucket 1, deferred by the years bucket 1 covers. That k^N₁ term cuts both ways: it discounts when your return beats inflation, and penalises when it does not. Bucket 3 is the residual, because the equity slice is what is left after the defensive money is set aside, not a number you get to pick.
Bucket 1 corpus
k = (1+i)/(1+r)
B₁ = E × (1 − kᴺ) / (1 − k)
E is your first-year annual expense, N the years covered, i inflation, r the blended post-tax return from the mix above. When r equals i the formula collapses to E × N, the familiar rule of thumb. Withdrawals are drawn from bucket 1 until it is empty, then bucket 2, then bucket 3.
Why withdrawals come at the start of the year
A spending bucket is drawn down as you live, not at year end. Year one's money is taken on day one and never earns anything. This is an annuity-due, and treating it as an ordinary annuity would understate the bucket by roughly one year of interest. See the assumptions behind these defaults for the inflation and return figures used across the site.
Ramesh sizes his safety bucket
Ramesh is 46, lives in Hyderabad, and is planning to stop working next year. His household spends ₹1,00,000 a month, so ₹12,00,000 in the first year of retirement. He wants four years covered, because he watched a colleague retire in late 2007 and spend the next three years selling equity into a falling market to pay for groceries.
His first instinct is four times twelve lakh, so ₹48,00,000, parked in a bank FD at 6.5%. Reasonable. But Ramesh is in the 30% slab, and FD interest is taxed at slab, so his real rate is 4.55%. Meanwhile his expenses are climbing at 6%. Run the arithmetic and the bucket needs ₹49,00,800, about a lakh more than his instinct, because the money is losing ground every year it sits there.
He moves the same money into an arbitrage fund instead, gross 6.5% but taxed at 12.5% LTCG once held past a year, so 5.69% post-tax. Now the bucket needs ₹48,21,300. Same instrument risk, near enough, and the tax treatment alone saved him ₹79,000 of corpus he can leave in equity instead. That is the whole argument for caring about which wrapper the safety money sits in.
Where people go wrong
The commonest mistake is treating the safety bucket as extra money that sits on top of the FIRE number. It doesn't. It comes out of the same corpus. If your FIRE number is ₹4 crore and your safety bucket is ₹49 lakh, then buckets 2 and 3 have ₹3.51 crore between them, and your long-term return assumption has to be built on that smaller equity slice, not on the whole corpus. Plans that double-count the safety money are more common than you would think, and nothing in the arithmetic flags it for you.
The second mistake is going too big. A bucket covering eight or ten years feels prudent and is actually expensive. Money in a 4.55% post-tax FD while equity compounds at 12% costs you real returns every year it sits idle, and over a thirty-year retirement that drag is enormous. The bucket exists to cover a market recovery window, and Indian equity drawdowns have historically recovered in two to four years. Sizing for a decade is insuring against something that has not happened.
The third is forgetting that this bucket has to be refilled. Sizing it right on day one is the easy part. The harder discipline is letting it drain the way it was designed to: spend bucket 1 empty before you touch bucket 2, and go to equity only once the two together are down to about four years of spending. A safety bucket you instinctively refill by selling equity in a crash is not a safety bucket at all - it is just a slower way of doing the thing you built it to avoid.
One more, less obvious than the rest: assuming FD rates stay where they are. This calculator holds the safe return flat across the whole window, which is fine for a three to five year horizon but would be wishful over longer ones. If rates fall, a bucket sized at today's 6.5% will drain slightly faster than the schedule below suggests.
A note worth reading before you act
The FIRE math works - but equity returns are not a guarantee. Every projection on this site uses long-term historical averages as a baseline. Markets can and do deliver a decade of poor returns, and if that decade happens to be the early years of your retirement, it puts real pressure on even a well-sized corpus. This isn't a reason to not pursue FIRE. It is a reason to build in margin.
The single most effective safety net is an active income source - even a small one. Freelance work, consulting, a part-time role, rental income. If your portfolio has a bad year and returns 6% instead of 12%, ₹15,000–₹25,000 a month of outside income means you don't have to redeem units at a loss while the market is down. You simply wait.
Financial independence is worth building towards. But “retired” doesn't have to mean “never earns again.” Keep a skill that someone will pay you for. Treat your corpus target as a floor, not a finish line. The goal is resilience - not just a number.
Not financial advice. planMyFIRE is not a SEBI-registered Investment Adviser. Calculator results are estimates based on historical assumptions and are for educational purposes only. Past market returns do not guarantee future performance. Consult a SEBI-registered adviser before making investment decisions. Terms of use.