You are previewing The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life.
O'Reilly logo
The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life

Book Description

Investors, shell-shocked by the "Great Recession" of 2008-2009, are looking for answers, for something fresher than the old 'buy-and-hold' mantra. They hunger for stability, yet yearn for growth to rejuvenate their battered portfolios.

Ray Lucia's The Buckets of Money Retirement Solution: The Ultimate Guide to Income for Life provides just that—a reassuring and scientifically proven strategy that gives investors both growth and income.

Lucia, a Certified Financial Planner who's helped thousands of people invest more than $2 billion, explains how to spend down 'safe' buckets (containing, for example, Treasuries, CDs, bonds), while leaving a riskier bucket (real estate, stocks and alternative investments) to grow long-term. This strategy shields investors from the short-term ups and downs of the market. And it gives them the courage and discipline to stay invested no matter what the future holds.

Written in a breezy, accessible style and loaded with tons of examples and clear, specific calculations, the book explains how to set your financial goals, divvy up your money accordingly, and then invest intelligently. With this book as your guide, readers will learn how to achieve both income and growth while at the same time reducing risk. "All in all," Lucia writes, "this plan is akin to a sports car that seats six, approximating the best of both worlds. In this case by being a conservative strategy that's also growth-oriented."

Almost every kind of investment—stocks, bonds, commodities, real estate—plunged in the past year or two, turning off millions of investors who'd been planning for and counting on a reasonably comfortable retirement. These retirees or near-retirees need solutions...something fresher than the old 'buy-and-hold' mantra. Yet here's what they hear from the financial-services industry: Set up an asset-allocation model, then take a systematic withdrawal to support your retirement...remembering, of course, to rebalance the accounts to remain in sync with the model. Wrong! That maximizes the advisors' fees but doesn't protect the investors' assets during the tough times.

Table of Contents

  1. Copyright
  2. Foreword
  3. Acknowledgments
  4. Introduction: let'S GET YOUR FUTURE BACK ON TRACK
    1. A New Strategy?
    2. The Fickle Fads
    3. Stick with Cash?
    4. What Else Is There?
    5. Time-Tested Principles
    6. How This Book Unfolds
    7. The Importance of a Plan
    8. My Bias
  5. I. REGAIN YOUR BALANCE
    1. 1. Adapt to the Changing Landscape
      1. 1.1. The End of Easy
      2. 1.2. The Lessons
      3. 1.3. A Final Word
    2. 2. Prepare for Whatever the Future Holds
      1. 2.1. Rebuild Your Savings
        1. 2.1.1. Spending Less
      2. 2.2. Rethink Your Retirement Years
      3. 2.3. Retool Your Retirement Savings Plans
      4. 2.4. Reinvent Your Strategy
        1. 2.4.1. Income and Growth
        2. 2.4.2. Academic Corroboration
      5. 2.5. A Final Word
  6. II. FORGE A NEW PLAN
    1. 3. Grasp the Buckets of Money Concept
      1. 3.1. Put Time on Your Side
      2. 3.2. Other Risks
      3. 3.3. Wall Street's Answer
      4. 3.4. Flawed Analyses
      5. 3.5. Main Street's Myopia
      6. 3.6. "Reverse Dollar-Cost Averaging"
      7. 3.7. Proper Allocation
      8. 3.8. Proper Location
      9. 3.9. A Final Word
    2. 4. Choose the Proper Investments
      1. 4.1. Bucket 1: The Income Bucket
        1. 4.1.1. Sub-Bucket 1A : The Lifetime-Income Category
          1. 4.1.1.1. A Recent Innovation.
          2. 4.1.1.2. Extra Cost.
        2. 4.1.2. Sub-Bucket 1B: The Fixed-Income Category
          1. 4.1.2.1. CDs.
          2. 4.1.2.2. Government Bond Funds.
          3. 4.1.2.3. I Bonds.
          4. 4.1.2.4. TIPS.
          5. 4.1.2.5. Immediate Term-Certain Annuities.
          6. 4.1.2.6. Floating Rate Funds.
      2. 4.2. Bucket 2: The Relative Safety Bucket, Mid-Term Investments
        1. 4.2.1. Fixed Annuities
        2. 4.2.2. Corporate Bonds or Corporate Bond Funds
        3. 4.2.3. Ginnie Mae Funds
        4. 4.2.4. High-Yield Bond Funds
        5. 4.2.5. International Bond Funds
        6. 4.2.6. Fixed Indexed Annuities (FIA)
        7. 4.2.7. Principal-Protected Annuities
        8. 4.2.8. Structured Products
      3. 4.3. Bucket 3: The Growth Bucket, Long-Term Investments
        1. 4.3.1. Sub-Bucket 3A: The Growth-and-Income Category
          1. 4.3.1.1. Traded Versus Nontraded.
        2. 4.3.2. Sub-Bucket 3B: The Long-Term Growth Category
          1. 4.3.2.1. Value-Averaging.
          2. 4.3.2.2. Other Possibilities.
      4. 4.4. A Final Word
    3. 5. Execute the Buckets of Money Strategy
      1. 5.1. First, Check Goals
      2. 5.2. Art and Science
      3. 5.3. Filling the Buckets
      4. 5.4. Bucket 1
      5. 5.5. Bucket 3A
      6. 5.6. Planning for Inflation
      7. 5.7. Bucket 3B
      8. 5.8. The Bottom Line
      9. 5.9. The Fate of the Heirs
      10. 5.10. Another Scenario
      11. 5.11. How Much Risk?
      12. 5.12. How to Allocate
      13. 5.13. The Importance of Bucketizing Now
      14. 5.14. A Final Word
  7. III. REFINE THE PLAN
    1. 6. Take Another Look at Annuities
      1. 6.1. What's an Annuity?
        1. 6.1.1. Fixed Annuities
          1. 6.1.1.1. Guaranteed-Payment Fixed Life Annuities.
          2. 6.1.1.2. Fixed Tax-Deferred Annuities.
          3. 6.1.1.3. Fixed-Indexed Annuities.
        2. 6.1.2. Variable Annuities
          1. 6.1.2.1. Death-Benefit Variable Annuities.
          2. 6.1.2.2. Living-Benefit Variable Annuities.
      2. 6.2. Predicting the Future
      3. 6.3. Good Evidence
      4. 6.4. What Academia Says
      5. 6.5. Recovery Strategy
      6. 6.6. Risks and Opportunities
      7. 6.7. A Final Word
    2. 7. See What REITs Can Do for You
      1. 7.1. What Exactly Is a REIT?
      2. 7.2. Combining the Best Features
      3. 7.3. Public versus Nontraded REITS
      4. 7.4. Another Advantage
      5. 7.5. The Lowdown on Loads
      6. 7.6. Are All REITs Low-Leveraged?
      7. 7.7. What Kinds of Properties Are Best?
      8. 7.8. Differs from Homes
      9. 7.9. The Role of REITs in a Portfolio
      10. 7.10. What Should You Look For?
        1. 7.10.1. Other Questions to Ask
      11. 7.11. Getting Help
      12. 7.12. My Personal Bias
      13. 7.13. A Final Word
    3. 8. Play It Smart When It Comes to Personally Owned Real Estate
      1. 8.1. Your Home and Your Future
        1. 8.1.1. Is It Affordable?
        2. 8.1.2. Risk Awareness
        3. 8.1.3. Making the Most of Equity
          1. 8.1.3.1. Trading Down
          2. 8.1.3.2. Pay Off Your Mortgage.
        4. 8.1.4. A Fan of Flexibility
          1. 8.1.4.1. Pay Your Mortgage from a Roth.
          2. 8.1.4.2. Refinancing.
          3. 8.1.4.3. Take Out a Reverse Mortgage.
            1. 8.1.4.3.1. How It Works.
          4. 8.1.4.4. Get an Unofficial Reverse Mortgage.
        5. 8.1.5. Think It Through
      2. 8.2. Buying Other Real Estate
        1. 8.2.1. The Fantasy
        2. 8.2.2. Single-Family Rentals?
        3. 8.2.3. Further Disadvantages
        4. 8.2.4. Buying Property through Your IRA
      3. 8.3. A Final Word
    4. 9. Give Uncle Sam His Fair Share—But No More
      1. 9.1. Tax-Free Municipal Bonds
      2. 9.2. Tax Management of Stock Portfolios
      3. 9.3. Real Estate
      4. 9.4. Roth Conversion
      5. 9.5. Incorporating Your Business
      6. 9.6. Tax-Credit Investing
      7. 9.7. Choosing Smart Location of Assets
      8. 9.8. A Final Word
  8. IV. LIVE HAPPILY EVER AFTER
    1. 10. Craft a Workable Withdrawal Strategy
      1. 10.1. Beware of Averages
      2. 10.2. Pitfalls Abound
      3. 10.3. Getting Set Up
        1. 10.3.1. IRA Rollover
        2. 10.3.2. Required Minimum Distributions
      4. 10.4. Drawing Down Your Total Retirement Resources
        1. 10.4.1. More? And in What Order?
        2. 10.4.2. An Example
        3. 10.4.3. When's the Greatest Need?
      5. 10.5. Keeping Taxes Low
      6. 10.6. A Few More Thoughts about Stocks
        1. 10.6.1. The "Lost Decade"
        2. 10.6.2. No Need to Gamble
      7. 10.7. A Final Word
  9. Epilogue: KEEP YOUR EYE ON ENJOYMENT
  10. About the Authors
  11. Recommended Resources
    1. Books
    2. Web sites
      1. www.aarp.org/money/revmort
      2. www.BucketsOfMoney.com
      3. www.cxoadvisory.com
      4. http://crr.bc.org
      5. www.ebri.org
      6. www.finra.org
      7. www.irs.gov
      8. www.morningstar.com
      9. www.sec.gov
      10. http://ssa.gov
      11. www.reit.com