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

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Investors, shell-shocked by the “Great Recession” of 2008-2009, are looking for answers, for something fresher than the old ‘buy-and-hold’ mantra. They hunger for stability, yet yearn for growth to rejuvenate their battered portfolios. Ray Lucia’s The Buckets of Money Retirement Solution: The Ultimate Guide to Income for Life provides just that—a reassuring and scientifically proven strategy that gives investors both growth and income. Lucia, a Certified Financial Planner who’s helped thousands of people invest more than $2 billion, explains how to spend down ‘safe’ buckets (containing, for example, Treasuries, CDs, bonds), while leaving a riskier bucket (real estate, stocks and alternative investments) to grow long-term. This strategy shields investors from the short-term ups and downs of the market. And it gives them the courage and discipline to stay invested no matter what the future holds. Written in a breezy, accessible style and loaded with tons of examples and clear, specific calculations, the book explains how to set your financial goals, divvy up your money accordingly, and then invest intelligently. With this book as your guide, readers will learn how to achieve both income and growth while at the same time reducing risk. “All in all,” Lucia writes, “this plan is akin to a sports car that seats six, approximating the best of both worlds. In this case by being a conservative strategy that’s also growth-oriented.” Almost every kind of investment—stocks, bonds, commodities, real estate—plunged in the past year or two, turning off millions of investors who’d been planning for and counting on a reasonably comfortable retirement. These retirees or near-retirees need solutions…something fresher than the old ‘buy-and-hold’ mantra. Yet here’s what they hear from the financial-services industry: Set up an asset-allocation model, then take a systematic withdrawal to support your retirement…remembering, of course, to rebalance the accounts to remain in sync with the model. Wrong! That maximizes the advisors’ fees but doesn’t protect the investors’ assets during the tough times. Amazon Exclusive: Q&A with Author Ray Lucia Can you describe the Buckets of Money Asset Allocation Strategy? Ray Lucia: Sure. I created Buckets of Money many years ago and it’s designed for retirees and pre-retirees. The asset-allocation component of it is a concept that I call “matching assets to liability.” Let’s see if I can make that clear. If you need to eat tomorrow, that’s a short-term liability. Therefore, you need to fund that liability with a short-term asset. But, you’re also going to need to eat twenty years from now. You fund that liability with a long-term asset. Short-term bucket. Long-term bucket. It’s all about matching assets to liabilities. What are some sensible financial goals for someone who is about to retire? Ray Lucia: Well, the biggest thing today is to have realistic expectations. If you think you’re going to earn 10 or 12% on the stock market and double your money every five or seven years, you might be fooling yourself. So, make sure you have a realistic expectation. Take into consideration when you will retire, when you’ll take social security, and what taxes you might be paying at that time. In the book, Buckets of Money Retirement Solution, I cover each and every one of those topics in great detail. What are some basic tips for asset allocation and diversification? Ray Lucia: Never do what I call “reverse-dollar cost averaging.” You’ve all seen the pie chart, and they all look nice and pretty. What individuals do, for the most part, is put their money in this pie chart, and then when it comes to retirement, they do “systematic withdrawals.” That’s a mistake. In Buckets of Money, we systematically withdraw from a safe money bucket, and we don’t reverse-dollar cost average out of the more volatile buckets. This method is covered quite extensively in the book. The economy is always changing. What are some ways to protect a nest egg in the event of a catastrophe? Ray Lucia: Right now, you have deflation and inflation working against you. No one knows if we’re going to have one or the other. That’s why you need to have a Buckets of Money strategy: a strategy that locks in long-term interest rates like guaranteed income for life, but is also sensitive to inflation down the road if in fact we have a bond bubble, if in fact we need to have something that grows over a long time period: assets like real estate, stocks and commodities. You really need a bar bell. You need something on the deflationary side and something on the inflationary side to protect you from either one or both. What are some of the risks to avoid if someone is either already retired, or about to retire? Ray Lucia: One of the greatest risks is watching too much television and reading into the radio talk shows too much. Most of the people that are pitching you stuff, whether it’s in books or tapes, or late-night infomercials, are really just trying to sell you something. We need to focus on strategy first: on managing taxes and then managing fees. If you do that with a Buckets of Money Retirement Solution, you shouldn’t have to worry about your retirement—ever.