Fill Up Your Buckets!

2010-06-09T11:38:00-07:00

If you’ve heard it once, you’ve heard it a million times: when it comes to retirement planning, diversification is key. Everyone knows how important it is to build up a healthy nest egg—but if you put all your eggs in one basket, you are putting your financial well-being at risk.

Look at it this way: if you throw all of your funds in one investment or market sector, what happens if that sector takes a nosedive? Your retirement savings will go down the tubes right along with it. However, if you spread your investment funds across a variety of different assets, you can greatly decrease your risk.

So, how can you possibly protect yourself from financial depletion and still save up funds for a comfortable and happy retirement? Simple. It’s time to fill up your buckets!

The Art of Bucket Planning
As Americans are living increasingly longer lives, one of the greatest risks today’s retirees face is the possibility of outliving their income. That’s why some financial advisors recommend that retirees adopt what’s called “bucket planning.”

Bucket planning is the act of spreading money across various pools of income to plan for a lifetime stream of income. This strategy is growing in popularity in the retirement planning field, and as a matter of fact, approximately 52 percent of financial advisors recommend the bucket planning method to their clients, according to Gallant Distribution Consulting.

Collect your buckets
There are a few different bucket planning methods. Some financial advisors recommend three buckets while others say you should fill up four. However, the most basic bucket planning strategy includes the following three pails:

Bucket #1: This bucket holds low-risk investments, such as short-term Treasury bonds and government securities. This pool provides a stream income for the first five to seven years of your retirement.

Bucket #2: This pail should be filled with intermediate assets that can include annuities* which can be structured in a wide array of details and benefits offering guaranteed income for the life of the contract. This bucket will provide income for years 8 through 15 of your retirement.

Bucket #3: This is the bucket for long-term investments, with the goal of providing a stream of income in your later years.

Another version of bucket planning includes investing in three or four different fixed or fixed indexed annuities* for each bucket; each again which has a unique set of terms and benefits with the insurance company guaranteeing both earnings and principal.**

In either strategy, each bucket represents a different stage in your retirement. The primary objective of your first two or three buckets is to create an annual income stream during your first 15 years of retirement. With proper planning, when those 15 years are up, the last bucket will still hold enough funds to be used as income throughout the remainder your lifetime. Because you have a bucket of income set up for each phase of your retirement, your planning should leave you with consistent cash flow.

An endless stream of income
Bucket planning has gained popularity because of its potential to create an endless stream of income that you potentially won’t outlive. If you set up your buckets properly, you won’t lose money, you’ll always be accumulating money and you’ll always have an adequate stream of income. That means you’ll live a comfortable retirement without having to worry about outliving your assets.
In other words, if you fill up your buckets properly, you won’t run out of money before you—well—kick the bucket.

*With Annuities, surrender charges may apply and if not held to maturity, surrender changes could lead to a loss of principal and, if taken prior to age 59 1⁄2, may be further subject to a 10% federal income tax penalty
**Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.

A New Look

2009-08-10T06:34:00-07:00

Grand Canyon Planning Associates, LLC. unveiled their new website to rave reviews.

Grand Canyon Planning wanted to update their site so that it would better compliment their high level of quality services. In addition they also wanted to incorporate some of the unique history and feel of the south west.

Money Talks

Fill Up Your Buckets!

A New Look