Retirement planning is not just about accumulating wealth—it’s about strategically managing your savings so that you can live comfortably, no matter what life throws your way. At BAM Advisory Group, we believe that a structured approach, like the Three-Bucket Strategy, can provide you with financial stability and peace of mind throughout your retirement.

In this post, we’ll break down how the Three-Bucket Strategy works, why it’s effective, and how you can use it to secure a stress-free retirement. Be sure to watch our in-depth video on this topic for even more insights!

What is the Three-Bucket Strategy?

The Three-Bucket Strategy is a simple yet powerful approach to managing your retirement savings. It’s designed to provide a balance between safety, income, and growth. By dividing your assets into three distinct categories, you can ensure that you have enough liquidity to cover immediate expenses, generate steady income, and grow your wealth over time.

At BAM Advisory Group, we’ve helped countless clients implement this strategy to protect their financial futures. Here’s how the strategy works:

Bucket 1: Safety & Liquidity

The first bucket is dedicated to safety and liquidity. This is your emergency fund, where you keep 6 to 12 months’ worth of living expenses. The goal is to have cash or cash-equivalent investments that are easily accessible and not exposed to market volatility.

What Goes Into This Bucket?

• • Cash savings

• • Money market accounts

• • Certificates of deposit (CDs)

These funds are not meant to generate high returns. Instead, they are there to cover unexpected expenses like home repairs, medical emergencies, or even large purchases. By keeping this bucket well-funded, you won’t need to dip into your long-term investments when surprises arise.

Bucket 2: Income & Stability

The second bucket is your income bucket, designed to provide a steady cash flow during retirement. This is where you draw your regular income to cover your day-to-day expenses, ensuring that you can maintain your lifestyle even after you stop working.

What Goes Into This Bucket?

• • Social Security benefits

• • Pensions (if applicable)

• • Annuities

• • Rental income

• • Dividend-paying stocks or bonds

This bucket focuses on dependable and predictable income streams that are not directly tied to the stock market’s ups and downs. At BAM Advisory Group, we work with you to structure these investments in a way that guarantees you a steady income stream for life.

Bucket 3: Growth & Long-Term Investments

The third bucket is focused on growth. This is where you allocate money that you won’t need for at least 5 to 10 years. The purpose of this bucket is to ensure that your savings continue to grow, helping you outpace inflation and cover rising healthcare costs.

What Goes Into This Bucket?

• • Stocks and ETFs

• • Real estate investments

• • Cryptocurrencies (if appropriate for your risk tolerance)

• • Alternative investments like REITs and structured notes

This bucket allows you to take on more risk for potentially higher returns. However, since this money is earmarked for the long term, you won’t need to worry about short-term market fluctuations. By keeping a diversified portfolio, you can grow your wealth while maintaining financial security.

How the Three-Bucket Strategy Protects You

One of the key benefits of the Three-Bucket Strategy is that it helps you take emotion out of financial decision-making. By having money segmented for different purposes, you can weather market downturns without panicking. When the stock market fluctuates, you can rely on your income and safety buckets while allowing your growth bucket to recover.

During times of economic uncertainty, such as recessions or unexpected events like the COVID-19 pandemic, having this strategy in place can be a lifesaver. It ensures that you have the flexibility and stability to continue living the life you’ve worked so hard to build.