Welcome back to another episode of Ready for Retirement. I'm your host James Cannell. On today's episode, we're going to be addressing a question from longtime listeners John and Donna. John and Donna have a question about the bucket strategy with regard to investments, specifically how do you construct or how do you invest that bucket number one of the three bucket strategy that's very popular amongst those who are retiring.

This is another episode of Ready for Retirement. I'm your host, James Cannell, and I'm here

to teach you how to get the most of the life with your money. And now, on the episode.

I'm excited to tackle this today, because for those of you who are unfamiliar with the

three bucket strategy, it's a popular approach to retirement income planning.

It involves dividing your assets into three different buckets with each serving a specific purpose and time horizon.

So bucket number one is that one that is designed to cover immediate expenses when you retire in those first few years of retirement.

And that's what's supposed to provide

that peace of mind and flexibility as you phase into this new chapter of life. So in today's

episode, we're going to be discussing just that. To start, though, let me kick us off by reading the

question that John and Donna submitted. They said, hi, James, we're long-time listeners and we love your

podcasts. My wife and I are hooked and discuss every episode over dinner and walks. Thank you. My wife, Donna, and I, John, are planning to retire on July 1st at 2026. We have about $1.6 million in pretty slash post-roth accounts with an 80-20 allocation. We will both be receiving a pension. Mine will be about $39,500

per year till the end of our lives with a 2% cost of living adjustment, and my wife's would be

$20,000 per year until she reaches age 65, which is in 2033. I will also be receiving a lump sum

pension of about $163,000 that can be rolled over to a tax-deferred account.

My personal slash sick accumulation will be cashed out at about $60,000 when I retire.

We have an emergency fund that ranges between $20,000 and $40,000, and we pay off our home in less than one year, and the payment is currently $1,400 per month,

so we will have no debt when we retire. We're trying to get ahead of things as much as possible.

One task we have on our list in preparing for retirement is to start constructing our bucket

number one of the three bucket strategy that will hold the first five years of our expense needs.

We know our approximate year-to-year

needs and after backing out our pensions, we'll need to fund bucket number one with about

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