4Buckets for Advisors
Artificial intelligence is computers professing information to learn from, tweak and use based on the next problem or situation it observes. It sounds more techy than it is, but it nonetheless is being used in more industries. We see financial planners taking advantage of this technology. Are financial planners inadvertently putting their role with clients in jeopardy?
When it comes to the complexity and nuances of financial planning and the importance that money has in our lives, a human component will continue to exist. But financial planners have to learn how to effectively use this technology and remain competitive.
Find out what we believe will be the greatest areas of impact that advisors will have in the future as artificial intelligence becomes more prevalent in financial advice.
A Better Path for Tax-Free Assets in Retirement?
In many cases, today’s retirees are positioned to leave a financial legacy. Some would like to see this go to family, others to charity or a mixture of both. On top of that, they want to know their financial legacy is tax-smart.
For many retirees, their assets sit in pre-tax accounts like IRAs and 401Ks after years of saving and investing. Assets not being used for everyday income can be earmarked towards these legacy goals. But every retiree knows that Uncle Sam wants his share. Leaving legacy money in IRAs and 401Ks could get a sizable haircut before arriving to their preferred beneficiary.
So how do you avoid the haircut? No, that’s tax fraud. Don’t do it. But there’s a way to do it that may be better than the conventional path towards tax-free assets. You see, many retirees are using Roth conversions to accomplish their end goal. It sounds neat, but what if there was a way to accomplish the same thing while giving you way more options. Options for enhanced lifestyle, lifetime gifting, broader investment choices?
Make sure you check this one out!
The Retiree “Impact Zone”
One of the most disrupting conversations we have with a retiree occurs when we have them consider elevating their retirement lifestyle. It goes against most everything that they’ve read or been told about income in retirement.
But in reality, a higher lifestyle is well within reach for today’s retirees. And once that new reality settles in and an income strategy is built to provide it, is where the fun begins.
We call it the “impact zone.” It’s a gap that is created when a retiree has income that meets or exceeds their spending pattern as they progress through retirement. It may sound excessive but we believe it creates more enjoyment, incorporates better investment principles and is even tax smart.
For this video, we’re going to focus on how the “impact zone” is created and what retirees are doing to enjoy it!
The Truth About Annuities
More often than not retirees have a tainted view of annuities and their role for retirement. Adverse marketing about annuities, product jargon and nuances, and advisor trust/distrust all play into the current distaste for annuities. Or perhaps, you’re reading this and wondering what all the fuss is about annuities.
Whether you love them, hate them or are just hearing about them for the first time, we are going to take a closer look at annuities. How do they work and what benefit do they provide? How do they stack up to other retirement income tools? How do advisors get paid when recommending annuities and other retirement income options?
We’re talking about all of this in an important behind-the-scenes look. The 4Buckets uses the entire range of retirement tools to build a strategy that you feel confident about. You deserve to know how it all works!
4Buckets Explained
Today’s retirement planning advice approaches a 30 year old and a 60 year old in the same manner. Upfront questions about risk tolerance and lifestyle now and in the future determine one’s probability for retirement success.
Have we ever thought that these two individuals from different eras, decades apart, and in completely different phases of life might want an approach unique to them?
The 4Buckets is a retirement income system designed for today’s retirees. Learn more about what makes it different and how it might be a better fit for those entering their golden years.
When Can I Take Income From my Retirement Assets?
Mindset and methodology are the two biggest factors for retirees when determining when to start receiving income from their retirement assets. Mindset is a behavioral tendency that takes time to adjust. Methodology deals with the way income is derived during retirement. With both of these, we’ll discuss common practices in today’s income planning landscape.
The 4Buckets framework brings a different approach to both of these factors. Regarding mindset, the 4Buckets is designed to help retirees look at the utility of their retirement savings for their lifestyle enjoyment and wealth accumulation – something that doesn’t come naturally when entering retirement. Through a different methodology, the 4Buckets uses simple visuals and language to build income strategies based on our natural preferences for income. A progression that moves from certainty to risk – both of which are needed for retirement income and investment growth.
Once retirees have gone through this sort of process, the decision around when to start income becomes much easier to make. Even decisions around Social Security timing become simpler. That’s because the 4Buckets strategy has built an income plan that marries certainty and risk in a new way that can make a retiree start income with confidence rather than worry or fear.
How Much Income Can I Take From My Retirement Assets?
The predominant approach to retirement planning consists of probability-based investment strategies to generate retirement income. In this model, retirement plans are often constructed around a series of assumptions, including investment allocation, anticipated income, and expected lifespan.
Rather than leading with these built in assumptions to generate a retirement plan, we’ll introduce an approach that emphasizes building income streams similar to the characteristics that we see in today’s pensions and social security benefits.
This new paradigm is the “safety-first” approach making the answer to the question of “how much income” far simpler.
Once secure baseline income is established, we’ll discuss the opportunities this creates with extra assets using Bucket 4 within the 4Buckets framework.
How Do I Invest in Retirement?
There are two phases in retirement planning – accumulation and income with each phase having its distinctions. But what if your investment strategy remained the same. What if the way you invested in your younger years looked similar to the way you invest in retirement?
In this article we tackle how to invest in retirement by first going back in time to observe the characteristics of investing during your working years. The financial elements present when establishing your risk tolerance in this previous stage in life are the same elements we build when creating a retirement income plan using the 4Buckets process. Why then, should your investment strategy be any different?
At the same time, we understand that age and desire can reduce investment stamina. That’s why it’s important to have balance across the 4Buckets when establishing your strategy. But at the very least, there can be much greater peace and clarity when we’re asked the question, “What is your risk tolerance?” when it is done so at the right time after following the right framework.
Am I Ready To Retire?
Those nearing retirement often turn to online tools and calculators to begin the process of determining their retirement readiness. But these tools are built using conventional retirement planning advice that has its shortcomings when assisting today’s retirees.
In this video we look at a traditional retirement calculator and highlight some of these shortfalls that are often unrecognizable to the typical retiree. Assumptions around retirement timing, income expectations and risk tolerance are some of these issues we’ll look at.
Next, we’ll contrast this to the 4Buckets system. This Buckets approach incorporates the entire income planning toolkit through a simple, visual framework to illustrate a strategy for retirement income. Using a step-by-step bucketing process, retirees build out a retirement income strategy that prioritizes the importance of baseline income, cash reserves, and a robust financial picture before assessing risk tolerance. This approach recognizes that retirement isn’t just about preserving assets but enjoying the present.
After comparing current calculators with newer tools like the 4Buckets, we’ll share the helpful pieces of information needed to extract the most value when using this tool.
