Why I Love the Retirement Bucket Strategy, Ep #24 

<p>The bucket strategy is a popular way to plan for retirement. Now only is it popular, but it’s an easy-to-understand approach that <em>works</em>. Everyone wants to retire and be able to live comfortably, but many people don’t realize that it takes some planning to do that. Social security and pensions aren’t enough to sustain your lifestyle. So what is the strategy? How does it help you reach your retirement goals? Listen to this episode of Retirement Made Easy to find out!</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li aria-level="1">[1:33] The retirement bucket strategy</li> <li aria-level="1">[3:20] Bucket #1: Your rainy-day fund</li> <li aria-level="1">[5:42] Bucket #1B: Upcoming expenses</li> <li aria-level="1">[6:57] Bucket #2: a 4% withdrawal </li> <li aria-level="1">[12:10] Bucket #3: Leftover money</li> </ul> <h2>Bucket #1: Your rainy-day fund</h2> <p>The purpose of bucket #1 is to be your rainy-day fund—AKA your emergency fund. This is for the unexpected circumstances that life throws your way. It might be a new furnace, A/C, or new tires on your car. We recommend that anyone in retirement should have 6–12 months of living expenses saved. If your current monthly expenses are around $5,000, you’d want at least $30,000 in bucket #1 for your emergency fund. </p> <p>This isn’t something you invest but simply hold in an account at your bank. These days, you won’t earn much interest on your emergency fund. But if you’re looking for the best bang for your buck, BankRate.com can help you weigh your options. </p> <p>Also always recommend something I call bucket #1B for “upcoming expenses.” For upcoming expenses, set aside a “sinking fund” where money is earmarked for upcoming expenses. After all, you don’t want to deplete your emergency fund to buy a new car. You might need to pay for dental work. Or you could be paying for a wedding or vacation. They are all near-term expenses that you need to plan for. </p> <h2>Bucket #2: Invest to sustain</h2> <p>You have to look at re