The Bucket Plan Approach to Retirement Income

I know that the prospect of retirement can be overwhelming. You may be wondering: How much money should I save? When should I start saving? Do I need an advisor? And then once you think you've got it figured out, there's another big question to answer: how do I make sure my money lasts throughout my retirement years? For some people, this is a simple matter of investing wisely and saving more of their income. But for others (like me), it's not so straightforward! There are so many factors at play when trying to predict how long your retirement will last—from lifestyle choices like travel or volunteering abroad to health risks like having certain medical conditions or becoming disabled before age 65—it can be hard to determine exactly how much money will be necessary when it comes time for those golden years.

What Is a Bucket Plan?

There are a few different Bucket Planning concepts available, however, in this article, I will discuss one of them. A bucket plan is a way to divide your savings into different accounts. It's a planning strategy that's flexible and customizable, so you can set up buckets to suit your particular situation. For instance, if you want to save for multiple purposes (retirement, early retirement, etc.), it might be helpful to create separate buckets for those purposes.

Similarly, if you're saving for different scenarios—such as college tuition or your child's wedding—you can also divide those funds into their own buckets. This allows you more flexibility than simply having all of your money in one account with no way of knowing what's happening with each part of your savings goals.

A third reason why people use the bucket approach is that they have different risk tolerances when it comes to investing their money; some investors like higher risk while others don't want anything other than safe investments. One way around this conundrum is by splitting up assets between accounts based on how much risk they're willing to take on: For example, if an investor wants a high-risk investment but only has $100 available at any given time (or month), then they'll put everything into one account until they can put more money aside later on down the road

Why You Need Multiple Retirement Income Buckets

If you're approaching retirement, or if you've already retired, it's important to have multiple income streams in place. Having multiple income streams means that if one of your investments doesn't perform as well as expected or one of your sources of income dries up for some reason, there are other options in addition to Social Security that can help provide a steady stream of retirement funds.

Having several different sources of retirement income also helps diversify your portfolio and spread out risk so that if something goes wrong with any particular investment or source of money—like Social Security benefits being cut—you aren't suddenly left without enough money coming in each month to pay bills and buy groceries (or whatever else is important). This can prevent situations where people run out of savings before they die.

Creating Your Bucket Plan

Your retirement plan needs to be more than just a single bucket. If you’re like most people, you’ll have different sources of income and investments that will help make up the bulk of your money in retirement.

The idea behind a bucket approach is simple: You have multiple buckets, or income streams, that each contains different things. Each one is designed to provide specific benefits in the event that one particular source doesn’t work out as planned. That way if something goes wrong with one source, at least you won’t be left unprepared for retirement without an income stream that works for you long-term.

It takes time and effort to create multiple buckets, but it’s worth it because it allows for more flexibility in how much risk or reward each bucket offers—and therefore allows for more control over what happens next once all those buckets are filled up again after reaching their capacity limits (which tends happen fairly quickly).

Having multiple income streams from retirement plans can be helpful.

A bucket plan helps you create a diversified portfolio, which can be helpful if you're concerned about inflation and market fluctuations.

It also helps to create a predictable income stream for retirement, so that the money you save is protected from the risk of stock market fluctuations—even if your investments are in stocks, bonds, or mutual funds.

The last benefit of having multiple income streams from retirement plans is that it provides tax-advantaged income because these types of accounts are taxed at different rates than regular investments such as stocks or bonds.

Now What?

If you’ve made it this far, we hope you feel a little more confident about your own retirement plan. Remember that there is no “right” way to create a bucket plan, so don’t worry if what we described doesn’t work for your own situation. The main thing is to work through the process of creating a strategy that feels comfortable for you and can help provide long-term income security in retirement! Talk to your Financial Advisor to start the conversation today, or schedule a 15-minute virtual coffee to discuss it further (www.meetwithbill.ca)