Use the Buckets of Money strategy for retirement income

In this episode of the "Protecting and Preserving Wealth" podcast, host Bruce Hosler and Jon Gay dive deep into the Buckets of Money strategy for retirement income. Amidst a backdrop of stock market volatility, geopolitical tensions, and inflation, Bruce presents the Buckets of Money strategy as a safeguard against Sequence of Return Risk—a serious risk retirees face when market downturns coincide with the early years of retirement.

Bruce breaks down the strategy into four distinct "buckets," each designed for a different period of one's retirement. The first bucket covers years 1-5 and is heavily oriented towards conservative fixed-income investments. Buckets two, three, and four progressively invest in riskier assets, aligned with the time when you'll need the money from those buckets. This  design approach is to protect you against short-term market fluctuations while also providing an avenue for long-term growth to combat inflation.

One highlight of the episode is the concept of dividing one's IRA into two parts: an "income IRA" and a "growth IRA." This demarcation adds clarity, helping clients understand from which account they'll  draw their immediate income and which one is for future growth.  Such segmentation also acts as a psychological safety net, discouraging panic selling during market downturns.  

As for the question on everyone's mind—what about taxes?—Bruce shares insights from his upcoming book, Moving to Tax-Free™.  Predicting that tax rates could double in the next decade, he emphasizes the value of tax-free accounts like Roth IRAs. These should generally fall into buckets three or four, maximizing their potential as a hedge against future tax hikes.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

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