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1.
In the bucket approach to retirement allocation, how do you determine how much money to hold in bucket 1?
Subtract certain sources of income from estimated spending needs for at least the next 12 months.
2.
In the bucket approach to retirement allocation, what is contained in bucket 2?
Income-producing, stable investments. This portfolio segment contains five or more years worth of living expenses.
3.
What is the purpose of the bucket approach to retirement allocation?
It helps retirees create a paycheck from their investment assets. The bucket approach organizes your assets in order to provide a safe method of income over the course of many years.
4.
In the bucket approach to retirement allocation, which bucket has the greatest potential for loss?
Bucket 3. Because this portion of the portfolio is likely to deliver the best long-term performance, it will naturally have much greater loss potential than buckets 1 and 2.
5.
In the bucket approach to retirement allocation, making withdrawals of principal from bucket 2 would probably make the most sense in what kind of environment?
A recession. This environment would see yields (and thus income) drop, possibly making it necessary to liquidate principal.
