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Not all retirement withdrawal strategies are created equal. And that makes perfect sense because not every retiree’s goals are the same.

Some people are retiring well into their 70s, they realize that they likely don’t have many years left to go and they’re not too worried about outliving their money. They just want to enjoy life to the fullest for the time they have left. For those people, more dynamic withdrawal strategies such as the 1/N method may be a viable option to fit their needs and goals.

Other retirees are retiring at a more normal age or perhaps slightly early and expect to be needing to withdraw from their nest egg for 20 or 30 years. These people may have a little bit more concern when it comes to outliving their money, but in comparison to a bare-bones early retiree, maybe not so concerned that they would be willing to forgo too many of the lifestyle perks that they have become accustomed to over the years. As such many of these retirees may want to adopt a more moderate to conservative withdrawal strategy.

Still, others are retiring incredibly early or just wish to leave a lot of money to their heirs or to a charity or cause when they pass on. For these individuals, a truly conservative strategy may be in order.

As you can tell in today’s video we are going to be continuing our series on retirement withdrawal strategies. Today we’re going to be covering a strategy called the three buckets of retirement withdrawals. As always we’re going to be going over what the three buckets strategy is, why we would use it, who it would work well for, and, of course, it’s pros and cons in comparison to other popular strategies.

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13 replies
  1. Michael M. Morgan
    Michael M. Morgan says:

    Long-term also means tax advantaged accounts, correct? And the move from these tax advantaged accounts to a brokerage account to hold the income bucket. The point of this strategy, I think, is that the income bucket give you flexibility to drip into the near-term bucket, as required, and be refilled from the tax advantaged accounts when the market is rocking.

  2. Stealthfighter4891 Johnson
    Stealthfighter4891 Johnson says:

    Great video, I just cannot except that it is common practice to retire in your mid 60's who ever thought that was a good idea lol if there is a time to enjoy and be active it's early and decrease your burn rate when you're 60+? Makes more sense to me.

  3. Andrew B
    Andrew B says:

    So if I use a 2% cash back credit card (I pay it off every 2 weeks) for the majority of my expenses, doesn't that mean I'm helping myself mitigate inflation? Lol just thought about that 😁

  4. Robert McKee
    Robert McKee says:

    Maybe consider a blend of the 4% rule and the bucket strategy, such as when your investments in bucket #3 have a surge. You can then pull some extra money beyond 4% out and put them into buckets 1 and 2 so that you are prepared for a market down turn. Love you videos.

  5. Robert Spencer
    Robert Spencer says:

    Hey Daniel, I have a question. At about 10:30 in the video should the 10 years bucket have been $320,000 as I thought it would be covering years 3-10? Great video, really enjoyed it. One of the best channels out there that I recommend to friends!!!

  6. hsingho lee
    hsingho lee says:

    i use this rule because it makes lots more sense to me except i make the cash bucket 5 years and the rest of my money wih 40 bond 60 stock allocation. my experince told me it can take 5 to 7 years to recover from market crash

  7. Chun Kau Simon Cheung
    Chun Kau Simon Cheung says:

    Love your video 🙂 What about just 2 buckets? Have 2 years expenses set aside as a giant emergency fund, and not draw money from investment at that one year when the market crash 20% plus? And slowly refill that bucket back up as I never spend all the withdrawal every year anyway? (And follow the regular 4% rule otherwise) How does that sound to you? I am retiring soon and that will be my plan I think 🙂


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