Buckets of Money

What is “Buckets of Money”? A conservative growth oriented strategy that hopefully will allow you to: Live comfortably Sleep well at night knowing you will never run out of money

The Buckets of Money objective To avoid running out of money before you run out of time

Advantages of Buckets of Money Safe - no investment risk – only guarantees Simplicity Proven Tames the twin demons – taxes and inflation Flexible – modify Buckets program as your situation changes Probate free transfer to your beneficiaries Private Purposeful

How it works... Bucket # 1Bucket # 2 Bucket # 3 Each Bucket is invested in a different way

Bucket #1 Safe - low growth vehicle Consistent, guaranteed tax favored income Principal and interest will be depleted over a number of years Meanwhile bucket #2 is growing...

Bucket #2 More safe income and an inflation hedge But a better return After Bucket #1 is empty, you pour money from Bucket #2 into Bucket #1 for yet another specified period of years

Bucket #3 Long term growth After Bucket #1 is empty, you pour money from Bucket #3 into Bucket #1 for yet another specified period of years Typically Bucket #3 will not be used for 14 to 16 years

A Quick Review Bucket #1 Short Term Income for 7-8 Years Pour into Bucket #1 When empty. More income with inflation hedge Long term growth years Bucket #2 Intermediate Bucket #3 Long Term

Step 1 – How much to put into bucket #1? Desired Monthly Income? Multiply x 12 7 Year Factor = 6.45 Example Income $10,000 per month $120,000 per year $120,000 x 6.45 = $774,000

Step 2 – How much to put into bucket #2? Current annual income needs Multiply by inflation rate factor 3% % % Multiply this number by 6.45 = Funds needed for Bucket #2

Step 2 – How much to put into bucket #2? Example – income $120,000 X 4% inflation factor (1.3159) = $157,908 bucket #2 income $157,908 x 6.45 = $1,018,506 $800,000 in bucket #2 earning 3.5% will grow to $1,018,506 in 7 years

Step 3 – How much to put into bucket #3? Funds not allocated to Buckets #1 or #2 go into Bucket #3 You’ll be 14 years older Bucket #3 will have 14 years of long term growth before being poured back into bucket #1

Buckets of Money Bucket #1 $3,500 per month for 7 yrs 91% Income Tax Free Deposit $268,965 7 Year Certain Immediate annuity More income with inflation hedge. $233,562 grows to $307,352 in 7 years at an average rate of 4.00%. This will pay you $4,000 per month for 7 more years when bucket #1 is empty. Long term growth – bucket #3 not needed for 14 years. $197,473 goes into bucket #3 and in 15 years grow to 6.38% Bucket #3 Longer Term Bucket #2 Intermediate Term Not needed until bucket #1 is empty

Buckets of Money A smart, yet conservative, way to protect-and grow- your nest egg