Managing the Bucket Retirement Planning Strategy 


Do you have a bucket plan for your bucket list?

In the 1960s, Star Trek was a revolutionary television program that delved into the possibilities of the great beyond. With many fans of the USS Enterprise nearing retirement today, the quest to “live long and prosper” is as strong as ever. To help those individuals work toward their retirement goals, it may be wise to consider a bucket strategy.

You may be asking: what exactly is a retirement wealth management bucket strategy and how can it be executed?

The bucket strategy assigns funds to different types of expenses (or time frames) with the goal of alleviating concerns about how money is spent. It can be executed by having different types of assets allocated to the various buckets.
There are two forms of creating bucket strategies.  They are:

  • The Expenses Bucket Strategy
  • The Timeframe Bucket Strategy

The Expenses Bucket Strategy can be broken up into three categories:
1. Basic Living Expenses – Expenses such as food, rent, taxes, and utilities can be the most important, as they are for your most immediate needs.
2. Discretionary Expenses – This category is dedicated to vacations, dining, entertainment, and other leisure activities.
3. Legacy Expenses – Having money for yourself is important, but to many people, having money allocated to family members, heirs, and charities also holds significant weight.

The Timeframe Bucket Strategy consists of:
A. 1-5 Years – As you may expect, this bucket funds your near-term expenses. It is generally believed to have up to five years of cash readily available at all times.
B. 6-10 Years – This category helps replenish the funds in the 1-5 Years bucket. Diversification may help manage investment risk.*
C. 11-20 Years – This bucket should be utilized for investments that provide more long-term growth.
D. 21+ Years – This category should have enough to replenish the 11-20 Years bucket, but, like the other buckets, also provide flexibility to replenish other buckets when necessary.

*There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

As you consider a retirement wealth management bucket strategy, it is important to consider different types of assets when building your strategy. Diversity is a key component of a successful strategy, but choose options that you truly feel comfortable investing in and always have enough cash available at all times. It is never too early to build your buckets!

The bucket strategy is as useful as the attention you give to each specific category. Putting the strategy into practice isn’t as simple as periodically throwing a few dollars into each bucket. Investors can create a successful bucket strategy by understanding each asset’s unique features and how it can maximize financial capabilities, then putting them in the right bucket.

Contact Us Today!    Live long and prosper!

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. No strategy assures success or protects against loss.