The “Bucket” Analogy

Think of your expenses and income sources as having their own buckets, each bucket having its own character. For instance, all expenses that are required for you to live should be grouped together in the “Required Expenses” bucket. Use the following diagram to assist you in placing your expenses and income in the various “buckets”: Required Expenses, Lifestyle Expenses, “Fixed” Income, and “Variable” Income.

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Retirement Income Planning

What is Retirement Income Planning?

It’s the process of developing and implementing a strategy that provides you with a “paycheck” during your retirement years. We take a cash flow approach to determine what retirement paycheck amount is needed to meet your required and lifestyle expenses. In essence, we start with your monthly expenses and back into what monthly income is needed. The retirement planning lifecycle begins with your asset accumulation phase and concludes with your asset depletion phase as presented by the diagram below. It’s important to reposition your portfolio approximately 5 to 7 years prior to and after retirement so that your portfolio does not experience a severe decline in value, possibly causing you to postpone your retirement or return to work.

Asset Accumulation




Financial Red Zone

5 - 7 Years Before & After

Retirement Date

Where Do I Stand?

The objective of retirement income planning is to answer the questions “Am I going to outlive my income and assets?” or “Am I going to have enough income and assets to retire?” The only way to solve these questions is to examine your “buckets”, as described above. It’s never too late to perform this exercise, but it’s best to formulate a plan prior to your retirement date. Vault Financial can assist you with this exercise and determine if you have a surplus or deficiency between your expenses and income sources.

Required Expenses

  1. Household

  2. Food

  3. Medical

  4. Other

Lifestyle Expenses

  1. Travel

  2. Entertainment

  3. Other

Total Expenses



“Fixed” Income

  1. Social Security

  2. Pension

  3. ????

“Variable” Income

  1. Investments (Stocks, Bonds, Cash)

  2. Rental Property

  3. Deeds of Trust

  4. Other

Total Income