When using a bucket strategy, taxes don’t need to be funded from the safety bucket. In most cases, it’s more efficient to pay them from the growth bucket.

Tax liabilities are typically modest—especially those arising from safety assets—and can be absorbed without meaningfully affecting the growth portfolio. More importantly, in normal market conditions, withdrawals are already being made from the growth bucket, which can comfortably fund both expenses and taxes.

In weaker markets, while expenses shift to the safety bucket, the tax component remains relatively small and can still be handled from growth without disrupting the overall strategy.

As a result, there is little need to reserve space in the safety bucket for taxes.