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Why Bucket Planning?

February 17th, 2020

Nowadays, people are living longer than ever, which can have a significant impact on the quality of your life and how you handle your money as you transition through the various stages of your retirement journey. Success in retirement is about much more than just the money. It’s a combination of managing risk and creating income out of the money you’ve saved to get you through retirement. Founder of Woman’s Worth® Jeannette Bajalia uses a bucket plan approach to mitigating risk so you can navigate retirement with confidence and predictability regardless of the economic environment or market performance.

What Is A Bucket Plan?

A bucket plan is a three-bucket approach to structuring your assets to prove reliable income when you need it and to grow your money over long-term time horizons to battle inflation, taxes, and unexpected life events throughout your retirement journey. Simply speaking, it’s a way of allocating the amount of assets you need for each life stage, so you don’t have to worry about running out of money.

The bucket planning process to financial planning provides peace of mind to thousands of couples and individuals who are retired or nearing retirement. “The clients we serve who are retired or nearing retirement reap the benefits of greater financial security because of the bucket planning process,” said Jeannette Bajalia. “They worry less about what the stock market is doing today and are more confident their assets will provide for them in the future, so they sleep soundly at night. They know they have something their parents and grandparents never had – a plan that addresses the risks and gaps in their retirement finances.”

Bucket Planning Eliminates Risk

The bucket plan takes all the guesswork and reliance on “luck” out of retirement planning and seems to debunk the old rule of thumb that says if you withdraw no more than 4% from your assets during retirement, you’ll never run out of money. Although many traditional financial advisors still abide by that rule and recommend this strategy to their clients, a 2013 study showed that with current market conditions, even a 3% withdrawal rate has more than a 20% failure rate. The researchers also found that for conservative investors with less than 50% of their assets in stocks, the chance of running out of money after 30 years is more than 50%.

Would You Take The Chance?

Imagine this: you’re in a line at the airport waiting to board a flight to Hawaii for some fun in the sun. Suddenly, the pilot steps out and announces: “Welcome ladies and gentlemen. I’m obligated to inform you that this flight has less than a 50% chance of making it to Hawaii safely today.” Would you board the plane? The answer is no.

Why take chances when you don’t have to? Yet, that’s exactly what many folks are doing when it comes to their retirement planning. Running out of money in retirement is no joke, especially when you reach your later years. Unfortunately, many of today’s retirees are skating on that kind of thin ice because they and their advisors are still operating under the old philosophy of throwing all their assets into one big bucket, withdrawing a set percentage each month, then crossing their fingers, while ignoring the possibility of market downturns. That isn’t a plan; it’s hope. You can’t rely on hope alone to provide you with financial security.

Let Woman’s Worth® Take The Worry Out Of Retirement

As a holistic financial planner, we are a team of advisors who build customized plans that address all aspects of a client’s financial life – tax, legacy, Social Security, insurance, and investments, as opposed to the traditional broker or advisor who just sells produces and portfolios. It’s our job to educate you about comprehensive and sound asset-positioning strategies that mitigate investor risk, so you’ll be less likely to make bad decisions in volatile times and be more likely to grow your money to last your future; that’s what the bucket planning process does. Click here to schedule a consultation and learn how Woman’s Worth can ensure you don’t run out of money before you run out of time!