In Best Selling Author Peter J. D’Arruda’s book “7 Baby Steps to a Ridiculously Reliable Retirement Income”, he was inspired by two things: “(1) The need for seniors to have as steady and reliable an income stream in retirement as they did when they were working, and (2) his daughter, Caroline (affectionately known as Carrie), whose transition from expert crawler to shaky toddler was a product of loving direction, her determination and her willingness to intrepidly take those first few steps into uncharted territory.”

In, Step Four Making Your Own Way, Chapter Eight, Pages 50-52, Coach Pete explains how financial engineers put in place a mechanism for creating a continuous flow of income from assets that you have accumulated. He states, “That image of water cascading over a water wheel puts us in mind of how lifetime income strategy might work. It’s continuous, dependable and self-attending.”

Now let’s see how to build your own Water Wheel of Money

CREATING INCOME BUCKETS

Bucket #1 Immediate Income – This bucket represents money that starts in the first year of retirement and continues for the next five years. Put a spigot on the bottom of this bucket to allow for a steady flow of money for five years. How much you put in the bucket depends on lifestyle and asset level. You and your financial advisor will need to budget/plan what’s right for you and put this bucketful of money into a position where it will be safe from loss, grow at a reasonable rate and provide you with income for the next five years.

The assets placed in the bucket can vary, you could use CD’s, bonds, or an immediate annuity. Everyone has different needs, so a trusted financial advisor would be best to discuss what you are looking for.

Bucket #2 Years Six through Ten – This is another five year bucket. It will now generate the income while the bulk of your assets continue to grow as much as safely possible. As with the first bucket, there are a number of different vehicles an advisor might use here, again all based on your particular circumstance.

Bucket #3 Lifetime Income – While the first two buckets are performing the dual task of income and interest, bucket #3 has been waiting until year ten to do what you put it there for, generate lifetime income. Here is where you scan the shelves of the retirement programs for the best guarantees. It is this bucket that you will look to for long term security and as much growth as safely possible.

Bucket #4 Emergency Money – While your other buckets are for you, by either providing income or earning interest, this bucket is kept for emergencies that may present themselves. This money will earn interest until you need it and should be fully liquid. How much in the bucket is up to you. The characteristics of this bucket are that the money is at your fingertips and available at a moment’s notice.

Bucket #5 Extra Money – The last bucket is that one where all the rest of your assets go once all of your needs have been accounted for, both current and future. You can use this bucket as you wish. Travel, blow it on children and grandchildren, or make repairs to an existing home. The sky’s the limit.

All of these buckets are better discussed in Coach Pete’s book. To pick up a copy or find out how to get started on your own water wheel, make an appointment with him or his team of trusted financial fiduciaries today. They can help make the complex financial world a little easier for you.