Also called: bucket strategy, cash bucket
Holding a set number of months of spending in cash so that withdrawals during a market decline come from cash instead of from investments sold at low prices.
RetIQ spends from the buffer first, refills it from the portfolio each year, and moves any excess above the target into the brokerage account. Refills from taxable or pre-tax accounts are taxable in the year they happen.
The buffer has a cost in the deterministic projection, because cash earns less than investments. Its benefit appears in Monte Carlo results.