Running out of money in retirement ranks as one of the top worries of investors. The Bucket strategy uses a three-pronged approach to generating income before and during retirement. When using the bucket strategy you should have a “now”, “soon”, and “later” bucket. The now bucket is designed to cover living expenses and large emergency expenses that may arise in the first year or two of retirement. The soon bucket holds money that you may need sooner rather than later and typically is used from year 3 to 10. The later bucket is designed for long- term growth and the final phase of retirement. It should contain higher-growth, long-term investments, such as commodities, real estate, and hedge funds.
Pros vs. Cons
Bucket 1 -“Cash Bucket” [1-3 Years of cash equivalents.]
Bucket 2 –“Income Bucket” [4-9 Years of Income Stability.]
Bucket 3 – “Long Term Growth” [Long Term Investments > 10 years. ]
For information on planning and saving for retirement contact one of our team members to learn more.