KCA Wealth Management is focused on keeping you informed and knowledgeable regarding your financial future. When we first read “The Bucket Plan” we knew it was a must share with everyone in our community. The book's three simple “buckets” help every reader understand the basic philosophies of wealth management and retirement planning, and apply this knowledge to their everyday lives. That is why we often hold educational webinars that are centered on the book’s principles. As always, you can register for any of our webinars on KCA Wealth’s events page. Don’t forget to register in advance; many of our seminars fill up early!
The Bucket Plan, and the associated courses we offer alongside the book, focus on the reasons it is essential to plan. There is no question that each and everyone of us, regardless if we just started saving, are all facing a historic event that we’ve never faced before, nor is anyone quite sure how to handle it; Retirement!
Holistic Planning Advisors
The key to the strategy, and what makes KCA Wealth Management different, is that it’s organization and leaders (Brian Kennedy and Vincent Catalano) focus on “Holistic Planning”. This technique focuses on three key factors: Life, Health, and Wealth. When taking into account these three essential factors, rather than just standard wealth metrics, a realistic and achievable retirement can be met. In fact, the technique is based on creating common goals and objectives, such as:
- Retirement Planning
- College Funding Planning
- Income Tax Planning
- Investment Planning
- Insurance Planning
- Fringe Benefit Planning
- Business Continuity Planning,
- Estate Planning
Oftentimes, an individual will likely have to see a multitude of professionals to properly plan for a variety of goals such as these, however, KCA Wealth Management is there every step of the way; with partnerships with accountants, real estate professionals, insurance professionals, and more, KCA ensures it’s clients financial health and future is reviewed from a holistic standpoint at every stage of its clients careers.
Three Largest Dangers of Retirement
Although retirement can be complex to plan, there are three major financial dangers that will impact your quality of life in retirement most. It is essential to assess and manage:
- Market Risk - Unsystematic and unable to be eliminated by diversification.
- Interest Rate Risk - change in interest rates leads to bond price volatility and inflation.
- Sequence of Returns Risk - order in which returns are received, impacted greatly when withdrawals or inconsistent contributions are made.
These are all serious risks that could, and have, destroyed retirements in the past. Even when plenty of money is saved during the accumulation phase, the distribution (retirement) phase could wreck your retirement. Too large of withdrawals, risky short-term investments or simply bad market timing, all have the potential to have damaging effects on a retirement in the long-run. In fact, we have previously written about The Sequence of Returns Risk exclusively as we’ve seen so many client’s challenged by this little discussed risk to everyone’s savings.
The Bucket Plan
However, even though there are a multitude of risks, there is substantial reward in investing. The Bucket Plan underscores this fact tremendously, but also provides investors with the knowledge to avoid major blunders. The entire strategy is based around a simple concept of just three “buckets”. Each bucket is to be filled for alternative time periods; if one follows closely it will not only help them holistically approach their retirement and financial future, but will also minimize the three major risks: Market, Interest Rate and Sequence of Returns.
The buckets consist of “now”, “soon” and “later”, with your soon bucket being safe and liquid. It should be filled with funds for the next 12 months of income, emergencies and any planned expenses. The “soon” bucket is invested comfortably, and is ready for withdrawals in the near future; the investments in this account will be fairly conservative, but still have a goal of outpacing inflation. Lastly, the “later” bucket, which includes long-term growth like assets for your heirs, long-term care, disability and other end of life concerns. The “later” bucket is full of assets for financial obligations ten or more years out primarily.
The bucket plan often does not, nor should it be in many cases, contain evenly distributed buckets. For instance, the later bucket should be much larger, or a focus of being filled, for most in the accumulation stage. This ensures that your long-term future, and especially your retirement, is prosperous. However, as retirement comes along your now bucket should become larger and larger, being that fewer long-term expenses should be expected, nor should it be necessary, with proper financial planning, to take any more risk with your savings.
The ultimate goal and benefit of this plan is that it minimizes those three main risks. If we can financially plan for now, the short-term and the long-term we can allocate our assets to minimize the effects of market, interest rate and sequence of returns risks on each of our buckets. In fact, although the long-term bucket could, and likely will, see large fluctuations in time, with a long-term time horizon these risks will be long forgotten years later when returns average out, and markets storm back to all time highs.
KCA Wealth Management is committed to its community and clients. Each and every individual, regardless of client status, we strive to inform and assist through their financial future. We hold and commit to the tools, information and designations our team and leadership holds. It is always best to start saving early, but it is never too late to ensure your financial future and goals are within reach. We are always happy to meet with anyone interested in learning more about our firm, assisting them in grading their financial health, and helping them achieve the future they desire. A meeting can be scheduled with someone on our team anytime on KCAWealth.com.
Securities offered through Concourse Financial Group Securities, Inc. (CFGS), Member FINRA/SIPC. Advisory services offered through Concourse Financial Group Advisors, a DBA for CFGS, a Registered Investment Advisor. KCA Wealth Management DBA, is independent of CFGS.