Alert
Close

Think you know AARP? What you don't know about us may surprise you. Discover all the 'Real Possibilities'

Highlights

Open

Introducing RealPad by AARP
You and Your Town Contest-You could win an AARP RealPad
AARP-iPad-ePub-app
AARP Auto Buying Program

Jobs You Might Like

Most POPULAR

Viewed

Financially Speaking

Make Your Money Last a Lifetime

3 ways to stretch your savings in retirement

2. The bucket strategy. Here, you target your investments to pay off over different time periods.

For example, you might set up five buckets. Bucket 1, to be used up during your first five years of retirement, would contain cash, certificates of deposit or an annuity paying a monthly income for five years. Bucket 2, for years six to 10, might contain a short-term bond fund and some Treasuries.

Buckets 3 and 4, for years 11 to 15 and 16 to 20, could own intermediate bonds and bond funds or balanced stock-and-bond mutual funds. Bucket 5, for money you don't expect to need for more than 20 years, can be invested more aggressively in stocks. Every three years or so, replenish the near-term buckets with money from the next bucket up.

Michael Kitces, research director for the Pinnacle Advisory Group, says that bucketeers often wind up with the same balanced stock-and-bond allocation as the total return investors do.

3. The income floor strategy. Provide for your basic income needs by buying an annuity with lifetime payments that start at the date you expect to retire.

Or, at retirement, put part of your money into an immediate payout annuity, which will send you a monthly check. Invest the rest in stocks and bonds, withdrawing the money according to the 4 percent rule.

A 2010 study by Gallant Distribution Consulting Research in Sherborn, Mass., found that more than half of financial planners now prefer the bucket or income approach. "People feel comfortable with it," says planner John Sestina.

What if you realize that your money won't last? There are other options — working longer or returning to work, cashing in your house, adding an apartment over your kid's garage. As I said, you have to be a fox.

Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW. Her column, Financially Speaking, will appear monthly in the Bulletin and online.

You may also like: What are my odds of a flush retirement? >>

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS Store membership discount aarp benefits

Members save 15% on eligible products/services, 5% on UPS shipping at The UPS Store®.

membership adt

Small business owners save 20% on new installation of any new ADT security system.

Mujer en la parte de afuera de so negocio

Free quotes for members from the AARP® Small Business Insurance Program.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points

Explore Your Learning Possiblities