there are quite a few different retirement withdrawal strategies out there and in this video i'm going to be going over the three bucket strategy when using a strategy like this one the three buckets i've seen clients able to handle and move through bear markets or big corrections like the the one that we're currently in a little bit easier than those people who do not have a plan or who did not prepare for for moments like this and that's why it's one of the favorite strategies that we use uh when it comes to income planning for
people the basic idea is that you divide your investments into three different buckets all with a different and specific purpose and goal tied to them so the first bucket is money that you're going to need in the near future usually it's two to five years worth of expenses in that bucket number one in that now bucket and uh as an example if you've got expenses or if you're going to be withdrawing about 50k from your investments each year then you would possibly have a hundred to 250 k in this first bucket the types of investments
that go into the first bucket would be things that are considered safe assets things like cash or money market or certain types of bonds but you want to be careful of the the kinds of bonds that you you put in this first bucket if you want them to to truly be safe now we're not going to expect big returns in this first bucket it's really quite uh it's really more of a conservative play right we're we're looking to more preserve and and conserve and and not grow so much in this first bucket think of it
more like an insurance for a market crash it's it's money that the goal is not going to be uh not that it fluctuates much and it's it's gonna what it has done in the past is bring peace of mind to people during market corrections knowing that they have this bucket set aside money that they're using right now and it's really been sort of like an insurance policy in for their retirement income plan the second bucket is money that you're not going to need within the first two to five years but you will in the next
five to ten years it's slightly more risky than bucket number one it's going to have more fluctuations ups and downs but it's not going to have wild swings like you're seeing in the in the stock market sometimes some even hold some specific investments that produce a higher level of income and they use that income to funnel to bucket number one so that that first bucket continues continually gets replenished and then finally the third bucket is a bucket that has higher risk investments things that are going to go uh up and down a lot more but
the goal here would be higher risk hopefully higher return these are things like stock funds or mutual funds uh some real estate is sometimes held in the third bucket or possibly even alternative investments we can expect with things like that that there's going to be a lot more fluctuations both up and down for that third bucket but because it's 10 year plus money we can allow that money to do or allow those investments to do what they do because we've got the other two buckets in place so that's really the basics of the three bucket
strategy i hope that was helpful for you and if you like videos like this on retirement specific ideas then consider subscribing or liking this video and i'll see you in the next video
