Three bucket strategy for financing retirement

There have been a number of articles and forum questions on best strategies for managing finances during retirement.

The choice, of course, depends on the individual situation. I came across this "three bucket" strategy that is intriguing.

First bucket is cash that meets near term needs ( one to two years of living expenses other than guaranteed income like social security.  This avoids withdrawal of investment funds during market downturns, particularly in early retirement years, which could cause "sequence of return risk" resulting in running out of money in later years.

The second bucket, covering the next five years, could be in bonds and bond funds. Income distributions will make up for spending from the cash bucket, when needed.

The third bucket is all stocks, focused on long term growth depending on risk tolerance.

This article explains more:

https://www.cnbc.com/2025/03/25/retirees-protect-portfolios-stock-market-downturn.html

What are the pros and cons of such a strategy? Are you already practicing some strategy like this?

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