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The optimal retirement plan should always prioritize protecting your hard-earned dollars. You need this money to last the rest of your life, and one way to help make that happen is via an approach called the “bucket strategy”. Here, your savings are divided into three areas – or buckets – and this article explains the purpose of each one.

📌The Immediate Bucket – This contains cash you need access to now, and can be held in various accounts, such as a high-yield savings account or a money market account. The focus is less on growth, and more on safekeeping.

📌The Intermediate Bucket – This bucket is designed to cover expenses further into retirement, such as for years two through 10. You want these savings to continue growing, but with low-risk exposure, so vehicles such as bonds or CDs might make sense.

📌The Long-Term Bucket – The goal of this bucket is to accumulate as much growth as possible. These savings are not meant to be pulled for at least a decade, and as such, might be invested more aggressively in stocks, real estate trusts, annuities, etc.

Above all, have a roadmap: The amount of varied retirement income strategies span wide, all with their own unique pros and cons. However, you will also find the same contrast within strategies such as the one described here. You may use different tools, and even different time frames, but the important part is to have a strategy in the first place.