Running out of money in retirement is a big concern for many people.
How do you manage your money so that it grows to keep up with inflation without being exposed to undue risks, like a bad sequence of returns.
One way to protect your assets and retirement income is to use the 3 Bucket Strategy.
The 3 Bucket Strategy gives you flexibility and helps protect against volatility.
Here’s how it works…
- Bucket 1 is your Now, or Spending Bucket for immediate needs.
The Now Bucket contains money that is liquid, safe and that you can access right away. The purpose of the Now Bucket is to fill in the gap between your income (social security, pension, etc.) and your expenses. This is also your emergency fund.
- Bucket 2 is your Soon, or Income Bucket, which is the money you will need in the next 3 – 8 years.
The soon bucket is invested conservatively and provides you with current income that is used to continually refill your Now Bucket. It is designed to grow a little and is comprised of income producing investments like bonds and real estate.
- Bucket 3 is your Later, or Growth Bucket, which is for the long-term and holds the money you will need 10+ years down the road.
The later bucket will hold growth type investments designed to outpace inflation. When doing well, this bucket can be used to refill bucket 2, and with plenty of money in buckets 1 & 2, this bucket can be left alone when the market is down.
While the 3 Bucket System does help make sure that your money will last in retirement, you still need a trusted advisor that works with you on each bucket and monitors the investments.
Jimmy Miller, the founder of Baobab Wealth Management, will take the time to personally work with you to build a plan and investment strategy that works for you.
Get a retirement income plan that will give you peace of mind to make sure that you don’t run out of money in retirement.