The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life

Chapter 4. Choose the Proper Investments

Now that you understand the scientific underpinnings of Buckets of Money, let's look at some of the investments that might be right for each bucket. After that, we'll get into an example of how putting those investments in the proper bucket could work in practice.

Bucket 1: The Income Bucket

You'll remember that in Bucket 1 we'll be looking for unrisky investments that will generate income while we allow the other two buckets to grow. For certain individuals with potentially long life expectancies, a well-documented strategy is to add a guaranteed lifetime income annuity for part of Bucket 1. Then the balance of Bucket 1 consists of short-term investments to be spent down over a five-to-seven-year period.

Thus, this Bucket 1 can be best broken down into subcategories. Let's call them 1A and 1B, like so:

• 1A will be for income for life.

• 1B will be for short-term, fixed income.

A number of good choices exist for investments in either sub-bucket.

Sub-Bucket 1A : The Lifetime-Income Category

This bucket will be giving us lifetime income, and the only way to guarantee payments for a lifetime is through an annuity. (We'll examine annuities in much greater detail in Chapter 6.) Annuities are life-insurance products that traditionally have frightened away many investors because of their complexity.

However, it's increasingly clear that well-chosen annuities from credit-worthy companies can work wonders in your retirement portfolio. That's not just me saying ...