The bucket approach to retirement-portfolio management, pioneered by financial planning guru Harold Evensky, effectively helps retirees create a paycheck from their investment assets.

The bucket concept is anchored on the basic premise that assets needed to fund near-term living expenses ought to remain in cash, dinky yields and all. Assets that won't be needed for several years or more can be parked in a diversified pool of long-term holdings, with the cash buffer providing the peace of mind to ride out periodic downturns in the long-term portfolio.

Here’s how the bucket approach works and how to fill each bucket.

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