New Delhi, July 13 -- In our last column, we highlighted that high equity allocation in retirement can reduce safe withdrawal rates due to sequence-of-return risk. This provoked a lively debate. Several readers suggested that a bucket strategy-where withdrawals come from safer assets-might allow retirees to hold more equity without worsening outcomes.

up, we examine why this is not true.

The main criticism of our earlier analysis was that the withdrawal strategy suffered from a key drawback: We were allegedly withdrawing from equity when the market was down, leading to poor outcomes. Many suggested that a bucket strategy would allow equity to recover after downturns as withdrawals will happen from the debt portfolio. This would permit r...