As investors approach retirement, their focus shifts from accumulating wealth to generating income. But how do you aim to ensure your money lasts through retirement, especially if you’re living longer than previous generations? At Keel Financial, we believe that implementing a comprehensive income distribution strategy is crucial to preparing for your financial future. In this blog post, we’ll explore the Income Distribution Bucket Approach and how it can help you generate an anticipated and income stream throughout your retirement.
What is the Income Distribution Bucket Approach?
The Income Distribution Bucket Approach is a retirement strategy that utilizes three different “buckets” to manage your income needs during different phases of retirement. The three buckets are:
Bucket 1: Cash (and cash alternatives) Reserve
This is the first and most immediate bucket. It includes short-term investments that seek to provide enough liquidity to cover living expenses and unexpected events.
Bucket 2: Income Generator
This bucket holds mid-term investments that seek to generate a reliable income stream throughout your retirement.
Bucket 3: Growth and Income
This bucket is for long-term investments, such as stocks and bonds, that seek to provide potential growth and additional income to supplement your retirement income needs. Investing involves risk including loss of principal.
How Does It Work?
The Income Distribution Bucket Approach works by maintaining a target balance between the different buckets to attempt to meet your income needs throughout retirement. In the early years of retirement, you would draw from Bucket 1 and Bucket 2 to cover your expenses. As you move into the later years of retirement, you would slowly shift your investments from Bucket 2 to Bucket 3 to maintain your portfolio’s growth potential while still generating income. Remember, no strategy assures success or protects against loss.
Why Choose the Income Distribution Bucket Approach?
We believe the Income Distribution Bucket Approach offers several benefits over other retirement strategies. Firstly, it provides a clear and understandable roadmap for how to manage your income throughout retirement. Furthermore, by strategically allocating your assets into different buckets, you can manage the risks associated with each investment type. Finally, by having access to an income stream, you can feel confident in your finances, allowing you to enjoy your retirement and focus on the things that matter most.
We understand the importance of preserving your financial future, especially during retirement. The Income Distribution Bucket Approach is a simple yet effective retirement strategy that can help you manage your income needs throughout your retirement. While no strategy assures success, we believe by utilizing a combination of cash reserves, income generators, and growth and income investments, you can pursue an income stream that allows you to enjoy your golden years with financial confidence. As your advisor, we’re here to guide you through the intricacies of retirement planning and help you pursue your retirement goals.
Disclosures
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Stock investing includes risks, including fluctuating prices and loss of principal.
Bonds are subject to credit, market, and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Winthrop Wealth, a Registered Investment Advisor. Keel Financial Partners and Winthrop Wealth are separate entities from LPL Financial.
