Three Bucket Method ??????????????? (annuity, bond, mutual fund, 401k)

[TxPanther]

Howdy All,

Getting closer to Retirement, I'd originally
posted about 6-7 months ago about
ideas and suggestions for 401K Money
to help fund my Wife and my Retirement.

//www.city-data.com/forum/inves...investing.html

Mathjak and Others had been very kind and Patient,
and one of the things that I remember being suggested
was using the 3 Bucket Method, and I was wondering
if the trouble that the Founder of that System had
makes it where this is not an acceptable ???

Having said that if it's still a viable retirement investment
opportunity?

If so, I was wondering if this would be a possible
scenerio that would be acceptable, I know it's
not based on the exact technique but still wondered
if it would work. We are combining this with both of
us drawing Social Security, and pulling approx 1200 a month
to help with expenses. We are only looking for 20-25yrs of
benifits.

(These are all funds in my Plan)

7 yrs in Vanguard Money Market Reserves Pr (VMMXX)
7 years in Vanguard Wellesley Income Inv (VWINX)
7 years in Vanguard PRIMECAP Inv (VPMCX)

Thanks In Advance for your Thoughts, and Sugguestions !!!

Take Care,

CK

[mathjak107]

wellesley income while a great fund so far for a retiree is much to volatile in my opinion for a bucket 2 fund. bucket 2 should be income and boind funds ,wellesley is more a balanced fund suitible for a bucket 3a (growth and income funds) 3b would be growth funds if you wanted to split up the equities for less swings in the stock bucket.

while ray never did the back testing he said he did others have and the bucket system is as good as any of the others out there.


it all really boils down to what you are comfortable with.

we all here about how retirees should stay away from risky investments like equities but once again the only thing we had to fear was fear itself.

in 146 years every single rolling 30 year time frame , no matter how bad things were ,from the great depression to world wars and all the market tumbling events we had you know what?

100% invested in the s&p 500 would never ever have failed and left someone broke at a 3.5% withdrawal inflation adjusted.

for all we fear and hear about equities and the danger it never ever happened that any group failed.

oooh loads have failed in cd's and conservative investments but to date 100% equities has always built up enough cushion in the good times to take substantial hits in the downturns and still be ahead .

so basically any system you stick to that has enough equities will work.

it is really more a mind game when you get into buckets then protection . we use different systems to isolate us from the volatility but the truth is it is all the same means to an end.

some systems get really simple . just equities and immeadiate annuities. you pay your bills with the annuities and let the stocks grow and grow providing inflation protection.

[TxPanther]

Originally Posted by mathjak107

wellesley income while a great fund so far for a retiree is much to volatile in my opinion for a bucket 2 fund. bucket 2 should be income and boind funds ,wellesley is more a balanced fund suitible for a bucket 3a (growth and income funds) 3b would be growth funds if you wanted to split up the equities for less swings in the stock bucket.

while ray never did the back testing he said he did others have and the bucket system is as good as any of the others out there.


it all really boils down to what you are comfortable with.

we all here about how retirees should stay away from risky investments like equities but once again the only thing we had to fear was fear itself.

in 146 years every single rolling 30 year time frame , no matter how bad things were ,from the great depression to world wars and all the market tumbling events we had you know what?

100% invested in the s&p 500 would never ever have failed and left someone broke at a 3.5% withdrawal inflation adjusted.

for all we fear and hear about equities and the danger it never ever happened that any group failed.

oooh loads have failed in cd's and conservative investments but to date 100% equities has always built up enough cushion in the good times to take substantial hits in the downturns and still be ahead .

so basically any system you stick to that has enough equities will work.

it is really more a mind game when you get into buckets then protection . we use different systems to isolate us from the volatility but the truth is it is all the same means to an end.

some systems get really simple . just equities and immeadiate annuities. you pay your bills with the annuities and let the stocks grow and grow providing inflation protection.

Howdy Mathjak,

Thanks so very much for your thoughtful reply as always !!!

Would a better plan be to have

7 yrs in Vanguard Money Market Reserves Pr (VMMXX)

7 years in Vanguard Total Bond Market Index Inv (VBMFX)

7 years in (A)Vanguard PRIMECAP Inv (VPMCX) (B) Vanguard Wellington Inv (VWELX)

I'd looked into the Annuities, and not sure that it's for me. could/would
a possible option be to keep the Vanguard Mutual Fund and also the Vanguard Primecap
and funnel the Dividends and Capital Gains into the Mutual Fund, and then reassess the
situation regularly???

As you'd once said I think about those that have a low pucker factor, and I don't want to
be constantly worried about that while I'm enjoying the 4th Quarter of Life
and I have do have a low pucker factor !!!!

Thanks so much again for all your Help and Guidance !!!

[mathjak107]

wellington to date was an awesome 1 fund to own for a retiree.

but it is considerably bond heavy. with rates having little where to go but up it may be weighted down to much in the bucket system.

ideally bucket 3 should have nice diversified all equity funds.


unless you split bucket 3 into a 3a growth and income and a 3b growth.

with the prospect for bonds looking dim i would prefer bucket 3 to be all equity .

the real question is what amount percentage wise were you hoping to draw? that should be the determining factor,.

heck if i needed only a 2% withdrawal rate short term bonds,tips and an immediate annuity acting like longevity insurance down the road would be my choice. no volatility at all. but income draw is reduced to about 1/2 the potential when equities are used.

in my own case things just got reshuffled 6 months from retirement.

we had a great retirement income structured that had some nice income from commercial properties which i planned around. well as luck has it our majority partner decided to sell the properties rights we had 2 weeks ago and although we got a nice sum of money i have to invest it now and carry more risk.

sooooo i went from needing nothing more than 2% withdrawals now up to needing 3.5% so volatility is an issue again for me.

so my plan is now to enter retirement with about 35% equities . 2/3's in the fidelity insight income and capital preservation model and 1/3 in the growth and income model and i will RAISE my equity allocations through retirement by 1% a year. if i live long enough i will stop at 70% way down the road.

that seems to be the safest approach current research can find. you avoid the dangerous first 5 years if markets or sequences are poor and you are forced to burn principal and the rising equity allocation beats inflation long term.

that equals the success annuities and equities working together has shown without buying an annuity.

[TxPanther]

Originally Posted by mathjak107

wellington to date was an awesome 1 fund to own for a retiree.

but it is considerably bond heavy. with rates having little where to go but up it may be weighted down to much in the bucket system.

ideally bucket 3 should have nice diversified all equity funds.


unless you split bucket 3 into a 3a growth and income and a 3b growth.

with the prospect for bonds looking dim i would prefer bucket 3 to be all equity .

the real question is what amount percentage wise were you hoping to draw? that should be the determining factor,.

heck if i needed only a 2% withdrawal rate short term bonds,tips and an immediate annuity acting like longevity insurance down the road would be my choice. no volatility at all. but income draw is reduced to about 1/2 the potential when equities are used.

in my own case things just got reshuffled 6 months from retirement.

we had a great retirement income structured that had some nice income from commercial properties which i planned around. well as luck has it our majority partner decided to sell the properties rights we had 2 weeks ago and although we got a nice sum of money i have to invest it now and carry more risk.

sooooo i went from needing nothing more than 2% withdrawals now up to needing 3.5% so volatility is an issue again for me.

so my plan is now to enter retirement with about 35% equities . 2/3's in the fidelity insight income and capital preservation model and 1/3 in the growth and income model and i will RAISE my equity allocations through retirement by 1% a year. if i live long enough i will stop at 70% way down the road.

that seems to be the safest approach current research can find. you avoid the dangerous first 5 years if markets or sequences are poor and you are forced to burn principal and the rising equity allocation beats inflation long term.

that equals the success annuities and equities working together has shown without buying an annuity.

Howdy Mathjak,

Thanks so very much once again, Appreciate all the information
and Help !!!

Take Care,

CK