Set up your retirement for success with this income strategy that uses Social Security and withdrawals from a taxable IRA.
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As we get older, it becomes increasingly important to consider strategies for managing our retirement income. One such strategy that has gained popularity in recent years is the “buckets of money” approach.
The basic concept behind buckets of money is that retirees divide their savings into different “buckets,” with each bucket allocated to a different stage of retirement. Typically, there are three buckets: an immediate cash bucket, a short-term bucket, and a long-term bucket.
The immediate cash bucket is designed to provide a stable and reliable source of income in the short term. This might include things like Social Security, pensions, and annuities. Some retirees might also decide to keep some of their savings in cash or money market accounts to provide flexibility and ensure a steady stream of income during the early years of retirement.
The short-term bucket is meant to cover expenses over the next few years. This might include things like day-to-day living expenses, travel, and unexpected costs. Retirees might invest this money in more conservative investments like bonds or low-risk mutual funds to ensure that it is readily available when they need it.
Finally, the long-term bucket is designed to cover expenses over the long term, such as healthcare costs or long-term care. This is typically the bucket where retirees invest in more aggressive stocks, mutual funds, or other higher-risk investments.
The idea behind buckets of money is to provide a sense of security and peace of mind for retirees. By drawing from multiple buckets, retirees are able to ensure a steady and reliable flow of income throughout retirement, without having to worry too much about market fluctuations or unexpected expenses.
Of course, buckets of money is just one strategy among many. Ultimately, the best strategy will depend on a variety of factors, including individual goals, risk tolerance, and financial situation. That being said, if you’re approaching retirement and looking for a reliable income strategy, buckets of money might be worth considering.
What company did you use for the bucket 3 annuity?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hans is always spot on!
I've got to call you Hans and get on your fee schedule. I'm one of those crazy fortunate public employees that is married to another public employee that both have state or local municipal pensions, DROPS, 457(b) plans, savings, I'm working on a second pension (double dipper, already collecting one), before I even figure SS. Taking SS early doesn't look viable with a retirement income stream from the pensions sitting near 132K annually. I guess the argument is…why take it early if you don't need to?
Okay so she gets on her husband's social security benefit would that cause her husband's benefit amount to go down because he's sharing it with her his wife?
I know you said that you don't like to get down into the details on one of these things, BUT I'M SO GLAD YOU DID. It starts to put a lot of the other principles you teach about into practice and into perspective so a person can start to see how multiple things work together for the best. Thank you for sharing real world current examples as I think they are amazing training tools. And not only that, but it really motivates me to continue saving as much now so I can eventually get to this also.
This bucket strategy I like. You use an annuity to replicate a "pension" like monthly income.
My wife and I had discussed retirement strategies for years before we eventually retired. You can't do too much planning!
Thanks Hans. Great channel.
Very informative, Hans. Thank you. You speak simply and clearly, which really helps.
So, "not really knowing what she was doing" gets you about 60% interest, but investing in an annuity IRA gets you about 6% interest. Hmmmmm…."
Hello sir, what about health care costs and Medicare contribution at age 65, are these factored in the gross income?
If you wait for the perfect time to start planning for your retirement, you might end up not doing anything. Ecclesiastes 11:4 TLB. Retired last year at 51 as a single mother with 2 million dollars with no debts. Thank God I took some courage to lnvest in my 40's. All my gratitude goes to Michelle Stewart. Meeting her in Texas contributed a lot to my life. She's just a life-changing financial Consultant.
Great job!