Buckets of Money

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Buckets of Money
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What is Buckets of Money?

• A conservative growth oriented strategy that
  hopefully will allow you to
• Live comfortably
• Sleep well at night knowing you will never run
  out of money

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The Buckets of Money objective

• To avoid running out of money before you run out
  of time

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Advantages of Buckets of Money

• Safe - no investment risk only guarantees
• Simplicity
• Proven
• Tames the twin demons taxes and inflation
• Flexible modify Buckets program as your
  situation changes
• Probate free transfer to your beneficiaries
• Private
• Purposeful

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How it works . . .
Bucket 3
Bucket 1
Bucket 2
Each Bucket is invested in a different way
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Bucket 1

• Safe - low growth vehicle
• Consistent, guaranteed tax favored income
• Principal and interest will be depleted over a
  number of years
• Meanwhile bucket 2 is growing . . .

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Bucket 2

• More safe income and an inflation hedge
• But a better return
• After Bucket 1 is empty, you pour money from
  Bucket 2 into Bucket 1 for yet another
  specified period of years

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Bucket 3

• Long term growth
• After Bucket 1 is empty, you pour money from
  Bucket 3 into Bucket 1 for yet another
  specified period of years
• Typically Bucket 3 will not be used for 14 to 16
  years

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A Quick Review
Bucket 3 Long Term
Bucket 2 Intermediate
Bucket 1 Short Term
Pour into Bucket 1 When empty. More income with
inflation hedge
Long term growth 14-16 years
Income for 7-8 Years
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Step 1 How much to put into bucket 1?

• Desired Monthly Income?
• Multiply x 12
• 7 Year Factor 6.45
• Example
• Income 10,000 per month
• 120,000 per year
• 120,000 x 6.45 774,000

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Step 2 How much to put into bucket 2?

• Current annual income needs
• Multiply by inflation rate factor
• 3 1.229
• 4 1.3159
• 5 1.4071
• Multiply this number by 6.45
• Funds needed for Bucket 2

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Step 2 How much to put into bucket 2?

• Example income 120,000
• X 4 inflation factor (1.3159)
• 157,908 bucket 2 income
• 157,908 x 6.45 1,018,506

800,000 in bucket 2 earning 3.5 will grow to
1,018,506 in 7 years
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Step 3 How much to put into bucket 3?

• Funds not allocated to Buckets 1 or 2 go into
  Bucket 3
• Youll be 14 years older
• Bucket 3 will have 14 years of long term growth
  before being poured back into bucket 1

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Buckets of Money
Bucket 1 3,500 per month for 7 yrs 91 Income
Tax Free
Bucket 3 Longer Term
Bucket 2 Intermediate Term Not needed until
bucket 1 is empty
More income with inflation hedge. 233,562 grows
to 307,352 in 7 years at an average rate of
4.00. This will pay you 4,000 per month for 7
more years when bucket 1 is empty.
Long term growth bucket 3 not needed for 14
years. 197,473 goes into bucket 3 and in 15
years grow to 500,000 _at_ 6.38
Deposit 268,965 7 Year Certain Immediate annuity
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Buckets of Money

• A smart, yet conservative, way to protect-and
  grow-your nest egg