A good tip I heard recently: when the market is up, you want to draw from bucket 3 for expenses and leave bucket 1 alone so it will be there (and full) when your investments in bucket 3 take a dip because the last thing you want to do is sell stocks when they're down.
We would love to further discuss our situation as I’m sure we are not alone. We are early 50s and have a daughter, 24, with special needs. We also own a business that will continue providing income after my husband retires from his primary job. He is looking to retire fall of 2026 but are very uncertain how to calculate our financial needs as we three retire together as the costs of our daughter seem more difficult to predict than our own. Love your show and has taught us so much about what we need to know and just don’t know as we head into the years prior to retirement!
James, this is perfect. I was debating whether to include dividend income as Guaranteed portion of my retirement plan and although logically it made sense to do so, I was reluctant. However, your expert opinion on it has affirmed my position. I will assume it as guaranteed income and decide on my 'safety bucket amount' based on that. Thank you for this.
Thank you, James. This clarified A LOT for me. Thank you for sharing all aspects of how to think about the bond section of the portfolio. It is the most helpful video on this topic, and I've been researching this heavily.
I’m nowhere near retirement (32 y/o) but I love financial planning content haha great video! I don’t know anyone my age with a pension and not sure I trust Social security to be there in its entirety. The way we are planning, if we do get SS it will just be icing on the cake.
My children are aged 23 and 24. They are on track to have $5 million by the time they’re 55 years old. If Social Security is around, it will only benefit that. Invest in your Roth, max out your 401(k), invest in the stock market or real estate, set up your disaster fund, set a budget and live within your budget under your means and don’t overspend.I love to see young people succeed good job to you for starting early
40 years ago we said the same thing about social security. It’s not as good now as it was for my parents and it will probably be worse when it’s your turn.
So glad to have found your info. I thank you & I bet my financial advisor should thank you too, as he has been offering similar advice and your information gives me faith we are on the right path so likely will continue following it!!
James, another outstanding video and great insight on the very good question topic!!! My and I can relate to the submitted question, and love your take on it. They may not need a 3 bucket portfolio 👍🏼
Fantastic piece. Just so you know, I watch a DIY UA-cam channel titled "I was Retired". He recently did a piece on the best places to get quality, unbiased information and he mentioned you. This was excellent and I'm passing your info on to all I know. We're inside the window, I was taking very copious notes and you posed a great question ... "Do you even need a bucket 1"? Thanks for furthering my education on our approach. I'll be watching all your content in coming episodes. Thanks again!
Agreed- been working 35+ years for several different large corporations and zero pension for either my wife or I. Our future financial security rests firmly on our shoulders alone hence why we still need to continue our work journey.
Hi James. Love your content. I'd like to ask a question that I haven't seen you answer yet. At what age should you start working with a financial advisor. Additionally what steps should I be taking in my 30's to prepare for a successful retirement? Thanks for all your valuable information!
It’s never too early to start working with an FA. If you start at 32, you’ll have time to check out a few and then stick with one you really like for the long term. In your 30’s, simply put, be socking away as much as you can and live as frugally as you can stand to.
My bucket 1 in vanguard mutual earning over 5% and two other funds managed by Vanguard paying divs and CG and i focus less on market yps and down but my overall yield/ gains at end of year.
Unrelated question. My husband and I are hoping to retire early...60 years old. We are dual US/Canadian citizens and will be living in Canada at least 4 months of the year. We would like someone to look at our numbers and advise wether it's better to reclaim residency in Canada for free healthcare or to just buy insurance through exchange. If we do reclaim residency how does that impact our taxes and estate should we pass while living in Canada. Are there financial specialist that can do that? Some direction would be appreciated.
Great video James. Watching this today over a cup of afternoon coffee and thinking, "When is a strategy not a strategy?" In other words, yes...making the correct decisions with allocations, factoring other sources of income such as pensions, dividends and available cash...make it unnecessary to choose from the typical bucket strategy, guardrails, etc. My wife and I are in this exact situation. The strategy is to use the two pensions, two SS and two dividend distribution accounts to live on and never touch the principal, allowing it to grow as a legacy portfolio. I guess that's a "strategy" but it takes out the guess work and forces us to focus on allocation into growth, value, Large, Mid, Small Cap, mixed investment grade corporate bonds, to serve as a backstop. PS. No mortgage, paid that off years ago and double dipping on pensions, too. Will retire in June 2025 at 63 and 59 yoa. The only thing we need to think more about is when to start taking SS? Love your style and delivery techniques while teaching your viewers various "real life" scenarios.
Can I just say: This couple seems like they are in incredible financial shape. Should be spending their time planning European vacations instead of worrying about how to invest their conservative bucket imo 😂
Historically, the average downturn is under one year and the average recovery is under two years. Isn't four years of expenses in CDs and other short-term instruments, in combination with social security and dividends, a sufficient safety net, allowing remaining investments to remain in growth?
They don't have 2 million, and they will have to pay taxes on some of that money. Not all of their money is in a Roth. You're not considering taxes and inflation.
lol😅I have a bridge to sell anyone who thinks these are real questions. He makes them up. Normal clients do not know what they do not know. A couple making less than $200k but saving $100k makes zero realistic sense. Where do they live? In the woods?
Nope... FL. 🙂 James was guessing at numbers based on the Roth... Maxing 401k, 403b, 457b (all pre tax), and a brokerage account. Late starters, trying to catch up.
After they come up with the number for bucket 1, and even 2, if they have a young adult child, I would contact a New York Life agent and put them in through 5-year pay custom dividend-paying life insurance through the child. If they prefund, now they can get 12% for year 1 and 6% every year after for the entire amount in prefund account. It's practically a tax advantaged compounding corporate bond based returns while liquidity of an online account via practical wash loans. Shouldn't bother with the lifetime hassles of swapping CDs and Treasuries just to get taxed each year, or the volatility of bond funds.
My questions- does the 6% payment increase with inflation? And why aren't financial advisors suggesting this as a solution, aka what drawbacks aren't we seeing?
@@rayzerot I think you are thinking of SPIA. What I described was to prefund a dividend paying life insurance. The 12% for year 1 and 6% every year after are fixed rates for the entirety of the amount in prefund account. Other than those fixed rates, there won't be growth for like 4 years via dividends but after year 4 people can expect around 5+% tax free growth in the policy even if rates go back down to zero for a while (that was the case even when interest rate was practically 0 for 15 years). Most financial advisors do not know much about insurance products and they can be company-specific, all they want to do is gather AUMs and charge the second biggest fees in life, after taxes. The money in the policy is likely outside of AUM which they control and can charge for.
You don’t have to relate to everyone to learn something. Maybe in 20 years you’ll be just as rich if not richer and you’ll have more insight than if you just skipped all these videos.
Rich people are rich because they pay attention to educational things like this and have the long-term discipline. It's not just about the (large) numbers, but about the percentages and concepts, regardless of how large the numbers are. Go well.
Very clear and well articulated. James is the best CFP on UA-cam. I like the way you walk viewers through the math.
James, This is very helpful. You do explain these financial strategies in a fantastic way. You're the Best of the Best on You Tube.
A good tip I heard recently: when the market is up, you want to draw from bucket 3 for expenses and leave bucket 1 alone so it will be there (and full) when your investments in bucket 3 take a dip because the last thing you want to do is sell stocks when they're down.
I agree, James talks about Guyton Klingler guardrails that helps guide WHERE to pull the funds (Stocks, Bonds, "Money" reserve). It makes sense to me.
Amazing when you are informed of all the laws and investment vehicles how you can survive financially. Thanks James!
We would love to further discuss our situation as I’m sure we are not alone. We are early 50s and have a daughter, 24, with special needs. We also own a business that will continue providing income after my husband retires from his primary job. He is looking to retire fall of 2026 but are very uncertain how to calculate our financial needs as we three retire together as the costs of our daughter seem more difficult to predict than our own. Love your show and has taught us so much about what we need to know and just don’t know as we head into the years prior to retirement!
I really liked the dividend component, gets the mental gears turning.
James, this is perfect. I was debating whether to include dividend income as Guaranteed portion of my retirement plan and although logically it made sense to do so, I was reluctant. However, your expert opinion on it has affirmed my position. I will assume it as guaranteed income and decide on my 'safety bucket amount' based on that.
Thank you for this.
Thanks James, another very informative video. You have a great way of explaining the thought process you need to go through to find the best solution.
James, great insights and discussion on this interesting quesiton. Thank you for sharing your knowledge and expereince to help your followers.
Thank you, James. This clarified A LOT for me. Thank you for sharing all aspects of how to think about the bond section of the portfolio. It is the most helpful video on this topic, and I've been researching this heavily.
I’m nowhere near retirement (32 y/o) but I love financial planning content haha great video! I don’t know anyone my age with a pension and not sure I trust Social security to be there in its entirety. The way we are planning, if we do get SS it will just be icing on the cake.
My children are aged 23 and 24. They are on track to have $5 million by the time they’re 55 years old. If Social Security is around, it will only benefit that. Invest in your Roth, max out your 401(k), invest in the stock market or real estate, set up your disaster fund, set a budget and live within your budget under your means and don’t overspend.I love to see young people succeed good job to you for starting early
40 years ago we said the same thing about social security. It’s not as good now as it was for my parents and it will probably be worse when it’s your turn.
So glad to have found your info. I thank you & I bet my financial advisor should thank you too, as he has been offering similar advice and your information gives me faith we are on the right path so likely will continue following it!!
James, another outstanding video and great insight on the very good question topic!!!
My and I can relate to the submitted question, and love your take on it. They may not need a 3 bucket portfolio 👍🏼
James' suggestions have really raised some questions we plan to dig into.
Fantastic piece. Just so you know, I watch a DIY UA-cam channel titled "I was Retired". He recently did a piece on the best places to get quality, unbiased information and he mentioned you. This was excellent and I'm passing your info on to all I know. We're inside the window, I was taking very copious notes and you posed a great question ... "Do you even need a bucket 1"? Thanks for furthering my education on our approach. I'll be watching all your content in coming episodes. Thanks again!
Thanks for watching!
I love the bucket system
I always find it more interesting how everyone seems to have a pension in 90% of “scenarios”. I guess it makes the stories better .
Agreed- been working 35+ years for several different large corporations and zero pension for either my wife or I. Our future financial security rests firmly on our shoulders alone hence why we still need to continue our work journey.
Govt workers
And they all have millions. Real normal!
Hi James. Love your content. I'd like to ask a question that I haven't seen you answer yet. At what age should you start working with a financial advisor. Additionally what steps should I be taking in my 30's to prepare for a successful retirement? Thanks for all your valuable information!
It’s never too early to start working with an FA. If you start at 32, you’ll have time to check out a few and then stick with one you really like for the long term. In your 30’s, simply put, be socking away as much as you can and live as frugally as you can stand to.
Paying the house off early still leaves the property taxes and homeowners insurance. The only savings is the mortgage interest.
Yep, and they both only go up every year as well as health insurance premiums and deductibles. Don't forget maintenance on the home too.
Well, the savings is not just the interest but also the principal too. Not having to pay the P&I can still be a substantial monthly savings.
But that mortgage interest is often hundreds of thousands of $$ down the drain long-term.
My bucket 1 in vanguard mutual earning over 5% and two other funds managed by Vanguard paying divs and CG and i focus less on market yps and down but my overall yield/ gains at end of year.
Unrelated question. My husband and I are hoping to retire early...60 years old. We are dual US/Canadian citizens and will be living in Canada at least 4 months of the year. We would like someone to look at our numbers and advise wether it's better to reclaim residency in Canada for free healthcare or to just buy insurance through exchange. If we do reclaim residency how does that impact our taxes and estate should we pass while living in Canada. Are there financial specialist that can do that? Some direction would be appreciated.
Well done James..Thank you!
Bucket 2 (income 5-8 years) would be more interesting. Please do one on that.
Great Video!
More risk more reward...Vanguard Growth Company funds? Buy..hold....❤
Is there a plan for people who make 40 thousand dollars a year?
Thank you. Was wondering why RMD is not included in the process.
Couldn't watch because of the bouncing camera. Had to listen only. Good info as always.
Great video James. Watching this today over a cup of afternoon coffee and thinking, "When is a strategy not a strategy?" In other words, yes...making the correct decisions with allocations, factoring other sources of income such as pensions, dividends and available cash...make it unnecessary to choose from the typical bucket strategy, guardrails, etc. My wife and I are in this exact situation. The strategy is to use the two pensions, two SS and two dividend distribution accounts to live on and never touch the principal, allowing it to grow as a legacy portfolio. I guess that's a "strategy" but it takes out the guess work and forces us to focus on allocation into growth, value, Large, Mid, Small Cap, mixed investment grade corporate bonds, to serve as a backstop. PS. No mortgage, paid that off years ago and double dipping on pensions, too. Will retire in June 2025 at 63 and 59 yoa. The only thing we need to think more about is when to start taking SS?
Love your style and delivery techniques while teaching your viewers various "real life" scenarios.
Can I just say:
This couple seems like they are in incredible financial shape. Should be spending their time planning European vacations instead of worrying about how to invest their conservative bucket imo 😂
invest ur bucket 1 in IRA high yield saving.
Historically, the average downturn is under one year and the average recovery is under two years. Isn't four years of expenses in CDs and other short-term instruments, in combination with social security and dividends, a sufficient safety net, allowing remaining investments to remain in growth?
$350k for bucket 1, after pensions, seems like a lot. But to each their own, I guess.
350k/5=70k + 40k pension + 20k pension till 2033 = 130k - taxes - pre-medicare costs - go go years finance... I'm not sure what I'm missing?
They don't have 2 million, and they will have to pay taxes on some of that money. Not all of their money is in a Roth. You're not considering taxes and inflation.
lol😅I have a bridge to sell anyone who thinks these are real questions. He makes them up. Normal clients do not know what they do not know.
A couple making less than $200k but saving $100k makes zero realistic sense. Where do they live? In the woods?
Nope... FL. 🙂 James was guessing at numbers based on the Roth... Maxing 401k, 403b, 457b (all pre tax), and a brokerage account. Late starters, trying to catch up.
After they come up with the number for bucket 1, and even 2, if they have a young adult child, I would contact a New York Life agent and put them in through 5-year pay custom dividend-paying life insurance through the child. If they prefund, now they can get 12% for year 1 and 6% every year after for the entire amount in prefund account. It's practically a tax advantaged compounding corporate bond based returns while liquidity of an online account via practical wash loans. Shouldn't bother with the lifetime hassles of swapping CDs and Treasuries just to get taxed each year, or the volatility of bond funds.
My questions- does the 6% payment increase with inflation? And why aren't financial advisors suggesting this as a solution, aka what drawbacks aren't we seeing?
@@rayzerot I think you are thinking of SPIA. What I described was to prefund a dividend paying life insurance. The 12% for year 1 and 6% every year after are fixed rates for the entirety of the amount in prefund account. Other than those fixed rates, there won't be growth for like 4 years via dividends but after year 4 people can expect around 5+% tax free growth in the policy even if rates go back down to zero for a while (that was the case even when interest rate was practically 0 for 15 years). Most financial advisors do not know much about insurance products and they can be company-specific, all they want to do is gather AUMs and charge the second biggest fees in life, after taxes. The money in the policy is likely outside of AUM which they control and can charge for.
They must work for govt. Yall funding that pension. Lol
Sorry, i can't watch a video about rich people who also have a oension too. I just can't relate to this. I have to stop this video.....
You don’t have to relate to everyone to learn something. Maybe in 20 years you’ll be just as rich if not richer and you’ll have more insight than if you just skipped all these videos.
Rich people are rich because they pay attention to educational things like this and have the long-term discipline. It's not just about the (large) numbers, but about the percentages and concepts, regardless of how large the numbers are. Go well.