A 60-year-old with Rs 5 crore spends Rs 20 lakh a year, rising with 6% inflation. Build a three-bucket plan, size each bucket, set the refill rule, and show it surviving a bad start.

Put Rs 63.7 lakh in liquid funds, Rs 134.3 lakh in debt and Rs 302.1 lakh in equity. Bucket 1 holds three years of rising spending and bucket 2 the next five. Bucket 2 refills bucket 1 every year; equity refills bucket 2 only from a year's gains. If equity falls 30% then 10%, no equity is sold for two years and bucket 2 never drops below Rs 109 lakh.

Picture a farmer who keeps three years of grain in the store and plants the rest. A bad harvest does not mean eating the seed. A retiree's real risk is not volatility itself but being forced to sell equity after a fall to pay the bills, which turns a temporary loss into a permanent one. This is sequence riskThe danger that poor returns early in retirement, while withdrawals are being made, do lasting damage that the same returns later would not.: the same average return does far more harm if the bad years come first. The buckets make sure the bills are paid from money that does not fall.

Size by spending, year by year, with inflation built in. Years 1 to 3 cost Rs 20.0, 21.2 and 22.5 lakh: Rs 63.7 lakh in liquid funds. Years 4 to 8 cost Rs 23.8 lakh rising to Rs 30.1 lakh: Rs 134.3 lakh in debt. Everything left, Rs 302.1 lakh or about 60%, goes to equity, because money not needed for eight years can ride out a bad market. The blended illustrative return is about 9.3%, against a starting withdrawal of 4% of the portfolio.

Write it so that nobody has to decide anything in a panic. Each year end: first, move money from bucket 2 to bring bucket 1 back to the next three years of spending. Second, only if equity rose that year, sell up to that year's gain to bring bucket 2 back to five years of spending. In a year equity falls, sell no equity at all; bucket 2 absorbs the refill and is rebuilt from later gains. Selling only gains, not selling to a fixed weight, stops the rule from draining a bucket that is still below where it started.

Run it. Equity falls 30% in year one and 10% in year two, then returns 20%, 15%, 12% and 10% a year. In years 1 and 2 no equity is sold; bucket 2 refills the liquid bucket and falls from Rs 134.3 lakh to Rs 108.6 lakh, still more than four years of spending. Equity sits at Rs 190.3 lakh at the low and is never sold there; in year 3 its Rs 38.1 lakh gain starts rebuilding bucket 2. Every year's spending is paid in full.

Buckets change when equity is sold, not how much risk the whole portfolio carries; at the start they amount to about 60% equity and 40% liquid and debt, with a disciplined selling rule on top. If equity stays down for more than about six years, bucket 2 runs dry and the plan must cut spending or sell equity after all. On flat illustrative returns the money lasts about 43 years, past Vinay's hundredth birthday, and tax, which this exercise ignores, will shorten that. Review the spending and the bucket sizes every year.