A Bucket Plan to Go with Your Bucket List

Julia M. Carlson |

The baby boomers have re-defined everything they’ve touched, from music to marriage to parenting and, more lately, to what “old” means—60 is the new 50! Longer, healthier living, however, can put greater stress on the sustainability of retirement assets.

There is no easy answer to this challenge, but let’s begin by discussing one idea—a bucket approach to building your retirement income plan.

The Expenses Bucket Strategy: With this approach, you segment your retirement expenses into three buckets:

  • Basic Living Expenses—food, rent, utilities, etc.
  • Discretionary Expenses—vacations, dining out, etc.
  • Legacy Expenses—assets for heirs and charities

This strategy pairs appropriate investments to each bucket. For instance, Social Security might be assigned to the Basic Living Expenses bucket. If this source of income falls short, you might consider whether another income product can help fill the gap. With this approach, you are attempting to match income sources to essential expenses.

For the Discretionary Expenses bucket, you might consider investments that offer the potential for growth and have a long-term history of paying a steady dividend .¹ Finally, if you have assets you expect to pass on, you might position some of them in more of an aggressive asset allocation since you won’t be needing them during your lifetime. 2

A bucket approach to pursue your income needs is not the only way to build an income strategy. But it’s one strategy to consider as you prepare for retirement. I’ve found this helpful in guiding clients to understand how to structure your investments for the long term.

Julia Carlson is a registered Principal with, and securities are offered through, LPL Financial. Member FINRA/SIPC.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

  1. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. Dividends on common stock are not fixed and can be decreased or eliminated on short notice.
  2. Asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss.