The Bucket Plan®

Introduction

At Salerno Financial Group, we follow The Bucket Plan® methodology to create individualized holistic financial plans for our clients. The Bucket Plan is a three-bucket approach to segmenting your money based on the time expectations of when you will need it.

Let’s create a foundation by examining the money cycle, which includes three distinct phases most people experience throughout their life: accumulation, preservation, and distribution.

The Money Cycle

The Money Cycle is something that we all go through during our lifetime, and there are three phases: accumulation, preservation, and distribution. Watch this video to learn more.

https://www.youtube.com/watch?v=b-gbjt9CJt8

Accumulation Phase

Accumulation starts when you are a child and continues into adulthood, throughout your working years as you begin to build your life savings. Since you have a lengthy time horizon before retirement, you can afford to take more risks with your money during this stage of life.

Preservation Phase

As you move toward retirement, you get into the preservation phase. In this phase, there is less time to make mistakes or experience major volatility because you will need this money sooner rather than later. You are financially secure and looking forward to retirement in the preservation stage.

Distribution Phase

The final stage in the money cycle is distribution. This is when you begin to draw from your assets and take an income from your savings and investments. Some people invest as if preparing for retirement in the distant future when they are retired or about to. This can deplete your savings, and you may not have time to make it up.

Time-Segmented Buckets

The Bucket Plan® philosophy was developed to segment money based on your investment time horizon, volatility tolerance, and income needs. Watch this video to learn more:

https://www.youtube.com/watch?v=HL0WJ1bPM-I

Now Bucket

The Now Bucket covers expenses like cars, home repairs, or emergencies in the first two years of retirement. This is where you keep funds that you can easily access if needed. Remember, inflation rates will outpace the returns you see from this bucket.

Soon Bucket

The Soon Bucket is designed for a decade of retirement with an inflation hedge. It needs to be much less volatile but invested so that it outpaces inflation without subjecting it to the direct ups and downs of the stock market. By choosing conservative investments, you can expect average returns to be higher than in the Now Bucket.

Later Bucket

The Later Bucket is your long-term growth money; it is designed for growth and legacy planning in the last phase of retirement. Since the money has been positioned conservatively in the Now and Soon Buckets, you can now invest in higher-growth opportunities.

Holistic Financial Planning

A holistic financial planner will take a 360-degree look at your situation to better understand your short-term and long-term goals for your life and money. A holistic financial plan offers a solution for any individual's economic puzzle by addressing the many financial items they need to consider when preparing for retirement.  

At Salerno Financial Group, we provide customized holistic financial planning strategies to our clients. Your advisor will develop a one-of-a-kind proposal to address your individual needs.