What is The Bucket Plan®?
The Bucket Plan® is a holistic financial planning process that incorporates all your assets into one comprehensive financial plan. It categorizes assets based on income, time horizon and tax qualifications. The key to a successful bucket plan is strategically positioning your assets into three distinct buckets: NOW, SOON and LATER.
NOW Bucket
This is the safe and liquid money that you keep in a checking, savings, or money market account. The NOW bucket contains easily accessible funds for both planned and unexpected expenses, such as an auto purchase, home repairs and an emergency fund. This bucket achieves minimal returns that likely will not keep pace with inflation. You don’t want
to have more money than necessary in your NOW bucket.
SOON Bucket
The SOON bucket contains the money you will use sooner rather than later so it should be invested for conservative growth. This bucket helps address two of your biggest risks in retirement: inflation and short-term market volatility. By investing conservatively, you avoid the risk of taking out money at a market low. The SOON bucket should not be exposed to extreme market fluctuations.
LATER Bucket
The LATER bucket is designed for long-term growth. Since we have strategically positioned money conservatively in the SOON bucket, we now have the confidence to invest in long-term, growth-oriented investments in your LATER bucket. This bucket also provides opportunities to address long-term care, tax management and legacy planning.
A common misconception is that legacy planning is “just for the kids.” However, legacy planning is critical for a surviving spouse. Going from married to single tax brackets, having your standard deduction cut in half, losing one of two Social Security checks, with a potential decrease in pension benefits, could result in taxes going up and income going down for a surviving spouse.
The Bucket Plan® is a way to holistically structure your assets to tackle today’s market challenges while meeting your current, short-term and long-term goals. Why not make it your New Year’s resolution to add The Bucket Plan® to your bucket list?
