Financial Buckets: An Example

Photo by Colton Duke on Unsplash

Last week we covered the Bucket Strategy, a method for ensuring sanity in your later years by accounting for assets, investments, income, and other factors.

This week, we want to walk you through the considerations Marc made when choosing a combination of a LIRP and other plans to satisfy all the financial buckets.

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Liquidity Bucket

Marc keeps an emergency fund in a dedicated savings account to account for unexpected expenses, whether they are related to the home, vehicle, health, or family. This account is large enough to cover nearly any kind of expense that would not otherwise be covered by insurance, so Marc does not have to borrow from other buckets.

Income & Long-Term Care Buckets

We mentioned that it’s important to have income in retirement, but just how is that possible if you don’t maintain employment or have a pension? There are insurance products that act like investments, and they also pay income on a recurring basis.

What’s great about this type of insurance, also known as a LIRP, is that the income is guaranteed for the rest of your life. Unlike a savings account, which could deplete, you will continue to get paid for the rest of your life, no matter how long that is.

When you pass, the remaining account value is awarded to your beneficiaries tax-free. This is superior to nearly all other strategies, including Roth plans, which carry heavy estate taxes.

These LIRP packages also include a long-term care income doubler, so you can cover additional expenses when you need additional care.

Marc allocated a portion of his investment to a LIRP due to the numerous income benefits outlined here.

Inflation Protection & Growth Bucket

Marc began his LIRP investment ten years ago, at age 48. He still has a long time to live, so growth is important to him. However, he also doesn’t want to risk it all in the event of a market downturn, because he would like to maintain his quality of life.

The first part of the growth strategy involves hybrid indexed annuities, which capture the market gains up to 13% per year, with none of the downside. This strategy has outperformed the market for all investments made since 2000.

Marc rounded out his portfolio with some other investments, including traditional mutual funds and ETFs. In addition, Marc’s dividends are reinvested, compounding the growth of his accounts over time.

Finally, these investments were made after tax, but Marc will not pay any taxes on the gains and income. This includes long-term care payouts.

The average growth of Marc’s investments has been about 6.7% per year over 10 years. While we fortunately haven’t seen a major downturn other than what happened in 2008, Marc would be completely protected from all downside in the event of another bear market.

Legacy Bucket

As we mentioned earlier, income that is not used up at the end of your life will be passed on to beneficiaries tax-free. Marc also carried over more traditional life insurance policies in addition to his LIRP.

When you structure life insurance correctly, it can really work out for everyone you care about. If something were to happen in the short term, your spouse would be taken care of financially. And the rest goes to your kids.


At the end of the day, the Bucket Strategy makes a lot of sense to us. It gives you the confidence that you’ll be covered, no matter what happens regarding your health or the economy. You’ll have your money properly allocated for growth, income, legacy, liquidity, and long-term care, and you will never have to pull from different one bucket to the other in a pinch.

Are you ready to learn how the Bucket Strategy could work for you? Give us a call today at 1 (866) 481–5211. We’ll take a look at your current financial situation and goals, and we’ll craft a plan customized to you, all risk-free.

Secure Retirement Strategies

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We help you get guaranteed income for life. srsstrategies.com

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