Retirement Buckets Process

The Dynamic Balance Retirement Calculator


The Calculator uses a two-bucket approach to spending in retirement.

  • The Today Bucket is for current spending needs for the next month to ten years, depending on the client’s situation.
  • The Tomorrow Bucket is a longer-term strategy to invest in a client’s portfolio for use in the future. The time horizon of the Tomorrow Bucket is usually over ten years, but withdrawals may happen sooner depending on the client’s unique situation, risk tolerance, and fluctuations in the markets.

Short and Long Term Strategies

  • The Today Bucket is a short-term strategy and is designed to invest in Frontier’s Capital Preservation, Conservative, or Absolute Return Strategy. The Calculator requires the expected return, expected inflation, expected volatility, and expected 5% downside numbers.
  • The Tomorrow Bucket is a long-term strategy and is designed to invest in Frontier’s Balanced, Growth & Income, Long-Term Growth, or Globally Opportunities Strategy. The Calculator requires the expected return, expected inflation, expected volatility, and expected 5% downside numbers.

The Calculator Helps Determine “How Much Can I Spend?”

The core function of the Calculator is to determine how much someone can spend out of their portfolio given certain parameters.

  • The advisor will input a client’s current portfolio size, how many years they expect to draw from the portfolio, and how many assets they want in the portfolio when they are finished drawing from it (Expected date of death).
  • The advisor chooses which Frontier strategy to use for the Today Bucket and which Frontier Strategy to use for the Tomorrow Bucket.
  • The Calculator determines how much to invest in each bucket and the amount that can be withdrawn from the Today Bucket on an annual basis. The amount that is invested in the Today Bucket is the amount of spending projected for the Tomorrow Bucket to return to a positive position after a major downturn in the markets.
  • A client can continue to withdraw cash out of their Today Bucket at the calculated withdrawal rate even through a down market. Frontier estimates at a 95% confidence level that a client should not need to take any money from the Tomorrow Bucket for annual spending while the Tomorrow Bucket is still down.

How does the Retirement Calculator work?

This tool asks you to separate the value of your client’s account into two time horizon pieces, or “buckets.” The first bucket or “Today Bucket” is money that your client will need in retirement over the next three or five or even ten (10) years of retirement. The second bucket or the “Tomorrow Bucket” will be money that your client doesn’t need to have access to during the first bucket time period, so again three to five or even ten (10) years. These are time periods you set and can be experimented with as you work through your client’s financial plan.

The near-term money is invested in a conservative strategy, such as Capital Preservation or Conservative, that will be able to grow within the shorter-term time bucket, but the emphasis is on caution in an attempt to shelter this money, so it is available to your client when they need it. The second bucket is invested in a more aggressive strategy that is designed to work with the conservative bucket to meet your client’s full retirement needs.

There are several different scenarios that the retirement bucket calculator can supply. For example, in one scenario, you will need to plug in the original size of your client’s account, the number of years they expect to survive in retirement, and how much money they want to take each year. The retirement bucket calculator will show you how much money they need to contribute to the conservative account and the approximate number of years that they will be able to pull money out of this bucket. The Calculator will also tell you how much they need to contribute to the more aggressive bucket and how much money they are expected to have leftover, given the information you plugged in.

As a second scenario, let’s say, your clients wanted to leave money to their estate. In this case, the retirement bucket calculator would ask for the original size of the account, how much they wish to take out each year and how much they want to have at the end of retirement. This scenario will tell you how much they need to contribute to each bucket to meet their goals.

Keep in mind that you can select the strategies of the conservative bucket and the aggressive bucket, so you can find a combination of strategies that both meet your client’s short and long term needs.

As an example, we are going to assume that your client has $500,000 to open up their two retirement accounts, and they want to pull out $15,000 per year, and they want to have at least $100,000 to leave to their estate. First, we are going to use the Conservative strategy in the Today Bucket and Long-Term Growth as the Tomorrow Bucket. With these constraints, the Calculator shows that they would invest ~$142,000 in the conservative bucket, ~$358,000 in the aggressive bucket and they would anticipate ending up with ~$748,000 to leave in their estate based on expectations and assumptions as of April 2020.


IMPORTANT: The projections and other information regarding the likelihood of various investment outcomes are hypothetical, do not reflect actual investment results, and do not guarantee future results. The estimates generated do not consider the impact of advisory fees. Results are derived from Frontier’s future long-term expected returns, downside risk, and other investment-related models. Projections from various “what if” scenarios for a client’s financial life may not reflect the actual costs or amounts ultimately needed to fund specific life events. Frontier is not liable for the use of the outcomes produced.

Past performance is no guarantee of future returns. Nothing presented herein is or is intended to constitute investment advice or recommendations to buy or sell any types of securities, and no investment decision should be made based solely on the information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for an investor’s financial situation or risk tolerance. Diversification and asset allocation do not ensure a profit or protect against a loss. All performance results should be considered in light of the market and economic conditions that prevailed at the time those results were generated. Exclusive reliance on the information herein is not advised. Asset allocation, diversification, and rebalancing do not ensure a profit or guarantee against loss. Consider investment objectives, policies, management, risks, charges, and expenses carefully before investing.

 Important Notes About Fees. The Long-Term Return Expectations, used in the Dynamic Balance Retirement Calculator, do not reflect the deduction of Frontier’s fees or any applicable financial advisor fees (i.e., they are used on a “grossoffees basis). Frontier’s maximum annual investment management fee for direct clients is 1.25% of account assets and 0.60% for accounts managed for clients of financial advisors. Client’s return will be reduced by the advisory fees and any other expenses Client may incur in connection with the management of the client’s investment advisory account. A description of the advisory fees charged by the advisor and Frontier and other important disclosures can be found in their respective Form ADV disclosure brochure. Frontier’s ADV Brochure, which includes a description of Frontier’s fees, is available upon request or may be obtained directly from Frontier’s website at It should be read for complete disclosures.

Please note that management fees charged by Frontier do not include certain charges imposed by third parties, such as custodial fees and mutual fund and ETF fees and expenses. Client accounts are also subject to, as applicable, transaction costs, retirement plan administration fees, deferred sales charges and/or 12b-1 fees paid by mutual funds and ETFs, transfer taxes, wire transfer, and electronic fund fees, and other fees and taxes on securities transactions. All fees and expenses imposed directly by mutual funds and ETFs are described in each fund’s prospectus. These fees will generally include a management fee, other fund expenses, and a distribution fee. If the sponsor also imposes sales charges, a client typically pays an initial or deferred sales or surrender charge.

Strategy Management Process. Each Frontier strategy consists of carefully selected investment products that are combined in an effort to achieve the Performance Objectives of the strategy. Strategies are managed using a four-step process. First, we establish a long-term asset allocation mix that we call the “Target Long-Term Allocation”. Periodically we adjust the Target Long-Term Allocation based on our changing expectations about the future risk and return characteristics of various asset classes to create the “Target Current Allocation”. Next, we develop an “approved list” of investment products that we believe can add value over time. Finally, we test thousands of combinations of investment products from our approved list to find the combination that we believe is most likely to perform better than the Target Current Allocation. Over time the mutual funds in the strategy will likely change.

This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions, and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell any securities, commodities, treasuries, or financial instruments of any kind.  This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, investment, or tax advice.

Hypothetical expected returns have certain limitations, are used for illustrative purposes only, and it should not be assumed that actual results will match the hypothetical expected returns used.  Unlike actual performance, hypothetical expected returns do not represent actual trading, and since trades have not been executed, the results shown may have under or overcompensated for the impact, if any, of certain unforeseen market factors.  Hypothetical expected returns, whether back-tested or forecasted, have many inherent limitations, and no representation is being made that any account will or is likely to achieve the results shown. In fact, there are frequently material differences between hypothetical expected results and actual results achieved.  One of the limitations of hypothetical expected results in that they do not take into account that material market factors may have impacted the adviser’s decision-making process if the firm were actually trading clients’ accounts.  Also, when calculating the hypothetical expected returns, the adviser has the ability to change certain assumptions and criteria in order to reflect better returns.  There are numerous other factors related to the markets in general or to the implementation of any specific investment strategy that cannot be fully accounted for in the preparation of hypothetical expected results, all of which can adversely affect actual trading and performance.  Importantly, it should not be assumed that investors who actually invest in any strategy will have positive returns or returns that equal either the hypothetical expected results reflected, or any corresponding benchmark presented.  In addition, performance can and does vary between individuals.

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Long-term expected returns will vary from month to month, depending on Frontier’s proprietary asset allocation models. The expectation is before fees and taxes, which will detract from the return. It is also before manager added value. Expected returns used in this Calculator have an accelerated risk reduction of 4% built-in.

Expected Downside is the lowest return Frontier would expect to encounter over the next 12-months if all the monthly returns fell within 1.645 deviations (95% statistically confident range) of the expected real return.

The estimates, including expected returns and downside risk, throughout are calculated monthly by Frontier and will change from month to month depending upon factors, including market movements, over which Frontier has no control.  They are only one factor among many considered in Frontier’s investment process and are provided solely to offer insight into Frontier’s current views on long-term future asset class returns.  They are not intended as guarantees of future returns and should not be relied upon in making investment decisions.

Frontier Asset Management is a registered investment adviser with the U.S. Securities and Exchange Commission; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made.  Additional information about Frontier and its investment adviser representatives is available on the SEC’s website at