Page 2 - March 2019 Lakewood Edge

smart spending
YOUR MONEY

THE JOURNEY:

‘BUCKET’ APPROACH TO SPENDING

LAKEWOOD REDUCES STRESS OF RETIREMENT

REAL ESTATE EDGE
by Janet Kidd Stewart $65,559 in cash. Without the cash
Publisher reserve, a 60/40 stock/bond allocation
Allison Van Wig nyone retiring in 2019 could “Creating a bucket would mean the couple had $300,000
CA DRE #00985700 A understandably be feeling a in stocks and $200,000 in bonds.
Clearly, the cash bucket creates a
little skittish.
There’s retirement research showing strategy can help clients more conservative portfolio overall,
market declines in the first few years which is important for retirees to
providing enough income for life, and compartmentalize assets understand as they try to find the
can devastate a portfolio’s chances of
appropriate amount of risk to cover
4435 E Village Rd recent volatility after a nearly decade- their expenses and inflation.
Long Beach, CA 90808 long bull market is worrisome. designed for certain Now, for the cost side of the
Interest rates moving higher could equation.
562-882-1581 be a good sign, in theory, for someone purposes or Anyone about to retire should know
Allison@superbroker.com hoping to build ladders of CDs, for precisely how much they are spending,
www.SuperBroker.com example. On the other hand, if it also though advisers said this is sometimes
ushers in an era of rising inflation, periods of time.” a big area for miscalculations.
that’s troubling, too. Particularly in the first few years,
But if delaying is no longer an travel and hobby expenses can really
option, either because of health, add up, notes Mike Alves, a financial
the job market or simply your own market decline. Social Security benefits and they have planner in Pasadena, California.
conviction, consider building in a few “Creating a bucket strategy can retirement accounts worth $500,000. “Every client is different,” he
contingency plans. help clients compartmentalize assets Suppose the couple wants to said. Rather than building in an
Several financial advisers contacted designed for certain purposes or withdraw $21,853 this year from unsustainable long-term withdrawal
for this article said they are carving periods of time,” said Ashley Folkes, savings, which is the spending rate rate to accommodate a few trips in
6427 Busch Blvd., out cash buckets for retirees’ living a financial planner in Scottsdale, Ariz. recommended by BlackRock’s the early years, he carves out another
Columbus, OH 43229 expenses. Some of them take spending “Having safe money to draw down LifePath Spending Tool. Using a bucket for big-ticket items. Clients see
877.872.3080
www.DiscoverPubs.com money directly from the cash bucket, from for the first few years alleviates bucket strategy, the couple would put that bucket and know that when it’s
replenishing it with stock gains some of the stress from the buckets $65,559 into the cash bucket while gone, it’s gone, and they are left with
Sudoku, Scrabble, Crossword periodically, while others keep the (that are invested in stocks),” she said. investing the remaining $434,441 in their long-term withdrawal rate that
and articles distributed by
Tribune News Services and cash as a reserve to draw from during Consider a couple retiring this a portfolio of 60 percent stocks and pays the essentials, he said. n
Brandpoint where noted. market downturns. year at precisely their full retirement 40 percent bonds.
© Copyright 2019 by Either way, they say the cash acts ages, as defined by the Social Security So, the couple will have about ©2019 Tribune Content Agency
Discover Publications, Inc. as a volatility buffer, allowing clients Administration. The 66-year-olds will $260,665 invested in the stock Distributed by Tribune
All rights reserved.
to refrain from panic selling into a get a combined $3,000 a month in market, $173,776 in bonds and the Content Agency, LLC.
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