Keep It Simple, Stupid – KISS. That is the best advice I can give for one’s retirement. The more complex your retirement plan the harder it will be to keep to it. Thus, the beauty of the 2-Bucket Retirement Plan.
It works just like this.
You need $50k a year in income. You get $30k from Social Security. You need to make up the extra $20k from portfolio distributions.
In bucket 1, you then keep 3 years worth of that $20k into a safe account, checking and laddered CDs.
In bucket 2, you invest in a diversified equity portfolio. Every year, when the market gives you gains, you take those gains and put them into the first bucket. If the market is down and your portfolio has lost ground, you leave it be.
Literally that simple.
Notice though in bucket 2 there are NO bonds. The reason is that your income, Social Security, pensions etc. should be viewed as your bond portfolio. So, given you have the bulk of your income coming from bonds there is no reason to add MORE bonds. You already have that covered.
You do need to check each year in this plan. It is NOT a set it and forget it plan. But, of course, NO retirement plan should be a set it and forget it. That’d be crazy.
If you start the year with $100k in bucket 2 and by year end it’s worth $120k. Take that $20k out and move it to the first bucket. Simple as can be.
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The Two Bucket Retirement Plan: Keep It Simple and Secure As we approach our golden years, retirement planning becomes an increasingly important aspect of our financial journey. It is natural to desire a retirement that is both comfortable and worry-free, allowing us to enjoy the fruits of our labor. The Two Bucket Retirement Plan, also known as KISS (Keep It Simple and Secure), offers a straightforward and effective approach to achieving this goal. The concept behind the Two Bucket Retirement Plan is based on simplicity, security, and a clear focus on financial stability. It involves dividing your retirement savings into two distinct buckets, each serving a specific purpose and ensuring a well-balanced financial future. Bucket one, also known as the "income bucket," is designed to provide a steady stream of income throughout retirement. This bucket should be filled with low-risk investments, such as fixed-income securities and annuities, which generate consistent returns. By allocating a portion of your savings to this bucket, you can cover your day-to-day living expenses, ensuring a reliable source of income even during market downturns. The second bucket, referred to as the "growth bucket," is aimed at maintaining and growing the purchasing power of your savings. This bucket should consist of higher-risk investments, such as stocks and real estate, which offer the potential for higher returns over the long term. By allowing your investments in this bucket to grow, you can ensure that your retirement savings keep pace with inflation and provide for any unexpected expenses that may arise. The beauty of the Two Bucket Retirement Plan lies in its simplicity. By clearly defining the purpose of each bucket, individuals can have a clear understanding of their retirement income and growth goals. This distinction helps eliminate the temptation to dip into the growth bucket prematurely, as the income bucket covers the immediate needs. Additionally, this plan offers significant advantages in terms of security. By building a solid foundation in the income bucket, you can weather market volatility without sacrificing your primary income source. This provides a sense of peace and stability during periods of economic uncertainty, allowing you to focus on enjoying your retirement years without worrying about financial fluctuations. Of course, like any retirement plan, the success of the Two Bucket Retirement Plan depends on diligent monitoring and adjustments to ensure it remains aligned with your goals. Regular reviews, especially as you near retirement, can help determine if adjustments need to be made, such as rebalancing the allocation percentages or assessing the performance of specific investments. In conclusion, the Two Bucket Retirement Plan (KISS) offers a simple yet powerful strategy to secure a fulfilling retirement. By dividing your savings into income and growth buckets, you can enjoy a reliable income source while allowing your investments to grow over time. This approach brings simplicity, security, and peace of mind to your retirement journey. So, start planning today and embrace the benefits of the Two Bucket Retirement Plan – a roadmap to financial serenity in your golden years. https://inflationprotection.org/simplified-retirement-strategy-the-two-bucket-plan/?feed_id=146798&_unique_id=652ecfcb91187 #Inflation #Retirement #GoldIRA #Wealth #Investing #401k #403b #529s #annuities #daveramsey #DebtFree #estateplanning #etfs #financial #FinancialPlanning #insurance #investing #Investments #ira #lifeinsurance #Medicare #passiveincome #plan #Planning #Retirement #retirementplanning #ROTH #rothconversions #RothIRA #savings #security #shouldIdoatrust #Social #socialsecurity #stockmarket #tax #Thrift #trusts #tsp #whencanItakesocialsecurity #wills #QualifiedRetirementPlan #401k #403b #529s #annuities #daveramsey #DebtFree #estateplanning #etfs #financial #FinancialPlanning #insurance #investing #Investments #ira #lifeinsurance #Medicare #passiveincome #plan #Planning #Retirement #retirementplanning #ROTH #rothconversions #RothIRA #savings #security #shouldIdoatrust #Social #socialsecurity #stockmarket #tax #Thrift #trusts #tsp #whencanItakesocialsecurity #wills
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