EPISODE #003
Your Financial Plan: Bucket Planning 101
“The best Financial Plan is the one you will actually do.”
– Get There On Purpose Retirement
Fidelity Investments Study:
Only 18% of respondents in general, and only 21% of BABY BOOMERS had created a written, comprehensive plan for retirement.
Financial Plans and Trees
Financial Plans are like trees in that the best time to get started is 20 years ago, and the second best time is right now.
Bucket Planning
Is a concept rooted in a 1952 paper by Harry Markowitz titled ‘Portfolio Selection’ that also gave rise to Modern Portfolio Theory.
Asset Allocation simplified is just being intentional with your assets and telling them what to do.
Key Idea of Bucket Planning
Strategically positioning portions of your assets for Liquidity/Protection/Income creating a ‘cushion in your time horizon’ to ride out volatility in your Growth Assets
The Buckets
- Safe/Liquid/Cash (Now) Bucket
- Emergency Funds
- Planned Expenses
- Up to a year of planned income (buffer for retired)
- Income/Protected Growth (Soon) Bucket
- More conservative
- Income/yield generating
- Downside protected
- Growth/Risk (Later) Bucket
- Longer term growth
- Legacy planning – spouse
“The best Financial Plan is…
Give yourself permission to be excited about retirement.
Dream and plan for the specifics of your unique situation.
“The clearer your retirement picture is, the more real it becomes, and the more likely you’ll achieve it.” – Get There On Purpose Retirement
Resources
Fidelity Investments Study – Retirement Mindset Factsheet
Paper – Portfolio Selection by Harry Markowitz
Blog Post – How to secure your financial documents
