Are You Using The 3 Bucket Approach ?

Tuesday, April 28, 2015 | Leave a comment

3 buckets of money

Thanks, to the advancements in health care, studies have shown that Americans are living longer.  Recently I came across a “Did You Know” article that gave a list of things that might surprise you about living longer in retirement.

  1. If you are 65 years old and you’re a man you have a 50% chance to live until your 87 years old.  This is an increase of 6 years since 1980.  If you’re a female and just past age 65 you have a 50% chance of living until age 89.  This is an increase of four years since 1980.


  1. At age 65 many men and women would like to give up the daily grind of the working world but still are not ready to walk away from the work force. Consider these social security facts and how your part time income could adjust what you receive:

Monthly Social Security             You Earn (part time income)          Yearly Benefit

$1,100.00                             Less than $15,720                                 $13.200.00

$ 1,100.00                             $16,000.00 – $19,999                           $13,060.00

$ 1,100.00                             $20,000.00                                             $11,060.00


  1. Retirement Income Costs are growing faster than the nest egg.  If your savings grew during 2014 the cost for a 55 year old to produce $1.00 in retirement income at age 65 rose from $12.47 to $16.62.  This is an increase of 33%.


  1. We’re all adapting to technology at a quicker pace. It took our ancestors 80 years to get use to the telephone.  It has taken people over 50, 24 years to adapt to a computer and a smart phone.


The author of the article had ten different points. It does not take an economics expert to figure out that the focus of the article was get us to think that how we can make our nest egg last longer. No matter if we reduce ourselves to some part time work or go directly into full time retirement.  Below are a few tips that may help to stretch your nest eggs.

  1. Most people retire sometime in their 60’s.  If you begin your retirement at age 62, begin taking your social security. Use this as your retirement base.  Studies have shown that if you delay taking social security until you can receive the maximum it takes 18 years until you break even.  To balance out your income you can use the income from a part time job if you choose to go that route.  It is also suggested to begin using your non qualified investment income.  This is your savings that have all ready been taxed.  If necessary profits from the sale of stocks, bonds and mutual funds can also be used.


  1. As you enter your 70’s and no later than 70 ½, your second bucket of money becomes available. The government requires you to begin drawing from your qualified accounts, which are your retirement funds from any company retirement plan or IRA’s.  The government has established specific payouts based around the required minimum distribution guidelines.  If you have several qualified IRA’s as long as you’re taking the required “RMD” from one account any other qualified can remain growing on a tax differed bases.  The “RMD” is not a fixed number each year as you age the payout percentage has a slight increase.


  1. Progressing in life through your late 70’s, life expectancy is shrinking. Utilizing both your social security and your RMD’s as a base is a time when additional monies from other qualified IRA’s and non qualified accounts can supplement your base line income. This third bucket of money can also be used towards health care cost, in the event that a long term care policy is not in place.  Presently, nursing home care is ranging from $6,000.00 -7,000.00 a month for a semi private room.  Through proper planning there is a way that this bucket of can be passed on to your beneficiaries and not to a health care facility.


Having a retirement strategic plan using the three bucket approach is one that will allow your nest egg to last longer and provide you the peace of mind that you won’t out live your money.  For additional information on how to implement this type of retirement plan please contact our office.

To learn more about John CasaSanta please visit our website  If you have any questions for John please e-mail him at or call 704-451-7020.





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