The Buckets of Money strategy authored and designed by Ray Lucia, CFP (r) is further substantiated by scientific studies that show that withdrawing from the lowest expected return assets (that is, the "safe" money that you have in CD's, money markets and short-term bonds) is the best methodolgy.
From Mr. Weigand and Mr. Irons in a study in the November 2008 Journal of Financial Planning, "...a strategy of consuming bond wealth first would have beaten the 50/50 rebalancing strategy and the stocks-first strategy about 90 percent of the time..."
"...The longevity advantage of bonds first portfolios increases when the spread of stocks' long-term earnings yield over bond yields is larger in the first year of retirememt..."
Today that yield spread is less than 1 percent (historic lows). Their findings also suggest that lifestyle strategies that decrease stock proportions as investors grow older may not be appropriate. This strategy does lower risk, however, so it should be reviewed closely before you plan to retire.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.