The rebalanced portfolio

It's the benchmark on the chart that behaves least like common sense — the one strategy that buys stocks while they're falling. It's also, in this simulator, usually the loser. Here's what it is, why it loses here, and the one condition that would make it win.

What it is

Take the same starting money and split it into a fixed mix — on the simulator's chart, 60% growth and 40% cash. A rebalanced portfolio holds those percentages fixed forever. Every year it pays your withdrawal, then does one mechanical thing: it sells whatever has grown above its target percentage and buys whatever has fallen below it, restoring the 60/40.

No buckets, no spending order, no refill rule. One pot, one rule: put the weights back where they started. And critically, it's a fixed yardstick — it doesn't change when you resize your buckets, so it gives you a stationary line to measure your bucket design against.

The thing it does that nothing else does

That one rule has a hidden consequence. When markets fall, your growth slice shrinks as a share of the pot — so rebalancing buys more growth, at low prices, to restore its weight. When markets climb, growth swells past its target, so rebalancing sells some, at high prices. It buys low and sells high automatically, without anyone deciding to.

That is a real mechanism, and in a market that crashes and then recovers it is genuinely powerful — you accumulated cheap shares on the way down and you still hold them at the top. It is the reason rebalancing has the reputation it has.

So why does it lose on the chart?

Because the payoff needs a rebound, and this simulator doesn't give it one. You set how far the market drops and how long it stays down; when the window ends, growth resumes from wherever it landed. There is no snap-back to harvest. Rebalancing still dutifully buys all the way down — and then never gets paid for it.

Meanwhile it keeps doing the other half of its job, every single year, forever: trimming whatever is compounding fastest to buy whatever is compounding slowest. Over thirty years that is enormously expensive. Hold the same 60/40 and never touch it — that's the "Moderate" line on the chart — and you finish with roughly two to three times the money of the rebalanced version. Same assets, same weights on day one. The only difference is the act of rebalancing, and here it costs between a fifth and two-thirds of the ending balance.

Rebalancing is insurance you pay for every year and only collect on if the market comes back.

That's not an argument against rebalancing in the real world, where markets do come back. It's a statement about what this model can and can't credit. If you believe a crash is followed by a recovery, the rebalanced line here is understated — and the honest thing is to say so rather than let you read the chart as a verdict.

And even where it wins, there's a catch

In the scenarios where rebalancing does come out ahead — a deep crash early in retirement, where its bond ballast cushions the fall — the edge comes entirely from a behavior almost no human performs. To capture it, you must sell assets while they're down to fund your groceries, and buy more stocks every year the market keeps falling, without flinching, in the middle of headlines telling you the world is ending.

The rebalanced portfolio's returns belong to a robot. The chart assumes you are one.

Decades of investor-behavior research say the same thing: people holding "better" portfolios reliably abandon them at the bottom — they stop rebalancing, or they sell out entirely, in exactly the years the strategy needed them to buy. A rebalanced portfolio that gets abandoned in year two of a crash doesn't beat the buckets; it does far worse, because it capitulated at the worst possible moment.

Why it's on the chart anyway

Because it's the strategy most advisors would actually put a retiree in, and because its logic is the strongest argument against holding buckets: why keep years of cash idle when a fixed mix rebalances itself? If BucketSavers only compared buckets against strategies that lose, the comparison would be marketing, not math.

It also earns its place by being the one line whose result you should distrust the most. Every other strategy on the chart is indifferent to whether the market rebounds; rebalancing lives or dies on it. That makes it the single best test of your own assumptions. If you think crashes recover, mentally raise that line. If you think a drop can be a permanent repricing, it's telling you the truth as drawn.

What the buckets buy isn't the highest ending balance — it's income that never depends on selling something that just dropped, and a plan you can hold onto when the screen is red. What rebalancing buys is a mechanism that pays only if you keep executing it through the worst years of your life. Both lines are on the chart so you can see the price of each answer.