Inspired by organizing consultant Marie Kondo's Netflix show and best-selling book, The Life-Changing Magic of Tidying Up, people are filling up dumpsters with possessions that no longer "spark joy."

Perhaps not coincidentally, Goodwill Stores have also seen a spike in donations of items that have done their jobs (and presumably have been thanked for their service).

Should your portfolio be next on your "To-Kondo" list? I'd say yes, emphatically yes. As with decluttering your home, winnowing down your number of accounts - and the holdings within them - can be incredibly clarifying. With fewer accounts and holdings, you can better focus on the really big determinants of your financial success: your asset allocation, your savings or spending rate, and your proximity to reaching your goals. You won't risk getting bogged down in small-bore jobs like assessing your portfolio's value/growth exposure or paying attention to earnings reports related to stocks that you own.

And just as a streamlined household is easier to clean, streamlining your portfolio makes it simpler to oversee it on an ongoing basis. Of course, no portfolio truly runs itself, unless you invest in a target-date fund (and even then, I wouldn't recommend a target-date fund for when you're actually retired). That's especially true in retirement, when you're necessarily trying to figure out how to extract some of your living expenses from your investments.

But if you stick with very basic investment building blocks for your portfolio, it will be simple to view and adjust your portfolio's asset allocation. You'll also be able to readily determine how you'll refill your cash bucket - the linchpin of a Bucket strategy - on an ongoing basis.

Before I go any further, I'll acknowledge that the idea for a minimalist portfolio isn't a new one. The Bogleheads have long enthused about a simple, three-fund portfolio composed of total market index funds, the subject of Taylor Larimore's fine recent book. Author Rick Ferri has proposed an even simpler "two-fund portfolio" that consists of a total world stock index fund and bonds.

A bucket strategy for minimalists

Yet as simple and elegant as a two- or three-fund portfolio is, my view is that retired investors should considering adding a fourth investment to their portfolios: cash.

Setting liquid assets aside to meet near-term living expenses is the focus of the Bucket approach to retirement portfolio management. The principle is that the long-term investments - bond and stock holdings in Buckets 2 and 3, respectively - in the portfolio can and will move up, down, and sideways. But if a retiree knows that she has enough cash set aside in Bucket 1 to match living expenses that are coming right up, she can make peace with those gyrations.

I also like that a Bucket approach can make it easy to visualise how much to allocate to each asset class based on expected portfolio withdrawals; it takes asset allocation from the theoretical to the practical. Withdrawals for the next couple of years go in cash, to help ensure money never has to be plucked from bonds or stocks at a low ebb; withdrawals for the next eight or so years go in bonds; and the rest of the assets go into stocks.

That way, in a worst-case scenario in which a calamitous bear market for stocks presents itself and lingers, a retiree would have a bulwark of roughly 10 years' worth of withdrawals in cash and bonds to "spend through" before touching the equity holdings.

By using portfolio withdrawals as the starting point, retirees can readily "rightsize" their allocations to each of the asset classes. For example, a retiree who's using a 4 per cent initial withdrawal might steer 8 per cent of his portfolio to cash (two years' worth of withdrawals), another 30 per cent or so to bonds, and the remainder to stocks.

Meanwhile, the (increasingly rare) retiree who's withdrawing just 2 per cent of her portfolio per year because she has a pension could have smaller stakes in safe assets: 4 per cent in cash, another 16 per cent or so in bonds, and the remainder in stocks (of course, that assumes she can live with the swings that would accompany such an equity-heavy portfolio). My hope is that retirees will think through their own situations and planned withdrawals when allocating to each of the buckets.

"Bucket maintenance" is another important aspect of implementing a Bucket strategy for your retirement portfolio. Bucket 1 is there for spending, but it will eventually need to be refilled. How best to do it? For all but extremely frugal retirees, relying exclusively on income distributions won't cut it. Even though yields have come up significantly in the past few years, a minimalist Bucket portfolio composed of cash, a total market index bond fund, and two equity funds (domestic and international) won't clear a 3 per cent yield today.

Instead, Bucket-oriented retirees employing total market index funds for their portfolios will need to employ rebalancing as a component of their cash flow strategies. Because rebalancing opportunities won't come up each and every year (see: 2018), that accentuates the value of holding two years' worth of living expenses in Bucket 1.