Reading Time: 5 minutesRetirement planning marks a crucial time in life, and a retirement bucket strategy is one way to manage your finances before entering retirement. As you come close to retirement age, it becomes essential to have a well-structured investment approach that ensures a comfortable retirement.  A retirement bucket strategy is an approach that involves dividing your retirement savings into different “buckets” based on different time horizons and investment goals. The approach minimizes market volatility and provides flexibility in managing your retirement income.  This guide will explore what a retirement bucket strategy is and how to use it effectively to plan for your retirement years. What Is a Retirement Bucket Strategy?  A retirement bucket strategy is an investment approach that involves dividing your retirement savings into three buckets based on different time horizons and investment objectives. These buckets are typically labeled as short-term, mid-term, and long-term. In addition, each bucket is invested in different asset classes and investment vehicles. A retirement bucket strategy aims to minimize the impact of market volatility on your retirement savings while providing enough flexibility to meet your short-term and long-term retirement needs. This approach helps you maintain a diversified investment portfolio, one that is able to adapt to changing market conditions and provide options for managing your retirement income. How Does a Retirement Bucket Strategy Work?  A retirement bucket strategy typically involves three buckets: short-term, mid-term, and long-term. Each bucket has a specific purpose, time horizon, and investment approach. Let’s see how all three buckets work. Short-Term Bucket  The short-term bucket is designed to cover immediate retirement expenses for the first few years after retirement. This bucket should include enough cash or low-risk investments, such as money market funds or short-term bonds, to cover your living expenses, healthcare costs, and other short-term financial needs. The short-term bucket is meant to provide a stable source of income and serve as a buffer against market volatility. It should be easily accessible and not subject to significant fluctuations in value. The short-term bucket should typically cover your living expenses for the first two to three years of retirement, providing you with peace of mind and financial stability during the initial phase of your retirement journey. Mid-Term Bucket  The mid-term bucket covers your expenses for the next 5 to 10 years of retirement. This bucket should be invested in a balanced portfolio of moderate-risk investments, such as diversified mutual funds or exchange-traded funds (ETFs), that offer growth potential and income generation. The mid-term bucket is meant to provide moderate growth potential while maintaining a certain level of stability. It should be diversified across different asset classes and sectors to spread the risk and minimize the impact of market volatility. This bucket should be reviewed and rebalanced periodically to align with your retirement goals and risk tolerance. Long-Term Bucket  The long-term bucket is designed to cover your expenses for later retirement years, typically beyond ten years. This bucket is invested in higher-risk assets, such as stocks or real estate, that have the potential for higher returns over the long term. The long-term bucket is meant to provide growth potential to keep up with inflation and provide a source of income well into retirement. However, it is also subject to higher market volatility and may experience fluctuations in value. Therefore, it is important to diversify your long-term bucket across different sectors, regions, and investment styles to spread the risk and maximize the growth potential. Pros and Cons of a Retirement Bucket Strategy  Like any investment approach, a retirement bucket strategy has advantages and disadvantages. So, let’s see some of the pros and cons of using a retirement bucket strategy for your retirement planning. Pros of a Retirement Bucket Strategy A retirement bucket strategy allows you to diversify your investments across different time horizons, asset classes, and risk levels. Diversification helps spread the risk and minimize market volatility on your overall retirement savings. The retirement bucket strategy provides flexibility in managing your retirement income. You have separate buckets for short-term, mid-term, and long-term needs, which allows you to adjust your investments and withdrawals based on your changing financial needs and market conditions. This flexibility helps you make informed decisions and adapt to unexpected situations during your retirement years. You can effectively manage your risk exposure by dividing your retirement savings into different buckets with varying risk levels. The short-term bucket provides stability, while the mid-term and long-term buckets offer growth potential. This risk management approach helps you balance your portfolio and reduce the impact of market downturns on your retirement savings. Having a retirement bucket strategy in place gives you peace of mind during your retirement years. In addition, knowing that you have a well-structured plan with different buckets for different time horizons and financial needs can provide you with a sense of security and confidence in your retirement planning. Cons of a Retirement Bucket Strategy Implementing and managing a retirement bucket strategy requires careful planning, monitoring, and periodic rebalancing. In addition, it may involve multiple investment accounts and transactions, which can be complex and time-consuming. You may also need to seek professional financial advice to ensure that you are making informed decisions. Despite diversification, there is still a risk of market volatility affecting the performance of your investments. The value of mid and long-term investments can fluctuate based on market conditions, which may impact your retirement savings. Therefore, it is important to be prepared for potential market risks and have contingency plans in place. The retirement bucket strategy may not fully protect against inflation risk. Inflation erodes the purchasing power of your retirement savings over time, and if the returns on your investments do not keep pace with inflation, it may impact your ability to meet your retirement expenses in the long run. Conclusion  A retirement bucket strategy can be useful for managing your retirement savings, minimizing market volatility, and providing flexibility in meeting your retirement needs. By dividing your investments into short-term, mid-term, and long-term buckets, you can balance risk and

Reading Time: 6 minutesThe “One More Year” syndrome is a psychological condition that forces individuals who want to retire to keep going for one more year. The syndrome is most prevalent in individuals who follow the FIRE movement. FIRE, for those who don’t know, stands for Financial Independence, Retire Early. It is a movement whose goal is to help us achieve financial independence with the ultimate goal of retiring early. FIRE is self-explanatory, but the “One More Year” syndrome has recently gained plenty of exposure, as experts tie it directly to FIRE. One More Year syndrome isn’t necessarily a negative syndrome, but it does state our disinterest in retiring, despite achieving financial independence and having enough money to support ourselves through retirement. This guide aims to explain the One More Year syndrome and provide our readers with a thorough explanation of what the syndrome is and how to overcome it.  What Is One More Year Syndrome?  One More Year Syndrome refers to a psychological urge that forces individuals who have reached a point of financial independence or have enough savings to retire comfortably to continue working for an additional year before retiring. This syndrome has many characteristics, but the most notable is the persistent feeling that “just one more year of work” will provide an extra cushion of financial security.  Individuals who continue working for one more year despite reaching a point where their current finances are sufficient to support them through retirement believe that one more year will allow them to make enough money for a more extravagant retirement lifestyle. But many also look at the syndrome in a negative light.  They believe the One More Year syndrome to be nothing but a means of earning more money despite achieving financial independence. Therefore, it can be a challenging mindset to overcome, as the allure of earning more money and further padding one’s nest egg can be enticing. Why do People Keep Working for One More Year? Several reasons exist as to why people may experience One More Year Syndrome. Some of the most common ones include: Fear of Running Out of Money Despite having a substantial nest egg, some individuals may still have lingering concerns about their financial security in retirement. They worry about unforeseen expenses or outliving their savings, leading them to feel the need to work for one more year to build an additional financial buffer. Such feelings aren’t uncommon, especially for those following the FIRE movement. But working for one more year reinforces doubts many FIRE followers have regarding claims they’ve achieved financial independence. Therefore, the One More Year syndrome states you’re not financially ready to retire.  Attachment to Work Identity Many people find purpose in their careers. Moreover, many people see their work as their identity. Therefore, retiring means letting go of a significant part of their identity, which can be daunting. However, continuing to work for one more year allows them to hold on to that familiar sense of self and purpose. The One More Year syndrome helps these individuals with attachment to work identity issues. For them, the syndrome isn’t a sign they’re not financially ready to retire, but they’re not psychologically ready to quit their jobs and careers.  Social Pressure A surprising number of individuals who experience the One More Year syndrome feel the social pressure of working past the point of achieving financial freedom. Nowadays, social norms and expectations play a big part in how others view us.  For example, retiring at 47 might be viewed as negative or lazy by some. As a result, most want to gain social approval from their peers to avoid judgment. This prompts them to continue for one more year to gain much-needed social approval and be viewed as hard-working and productive members of society.  Lifestyle Inflation A core pillar of financial independence is living below your means. However, many experience lifestyle changes as their incomes and investments increase over time. The sudden change in lifestyle inflation forces individuals to rethink their retirement strategy. Upon further review, individuals conclude that their current income level isn’t sufficient to support life through retirement, especially with increased spending and expenses.  On the other hand, many factors related to lifestyle inflation are economic in nature. These are unforeseen and hidden factors, and many FIRE movement followers fail to predict them when developing their retirement strategy.  As a result, they encounter the One More Year syndrome and look to continue working to maintain the same level of spending and lifestyle in retirement. Benefits of One More Year Syndrome With that said, not all is doom and gloom with the One More Year syndrome. Despite outlining the clear and obvious holes in individuals’ retirement strategies, the syndrome has its benefits. Those include: Continuing to work for one more year does provide individuals with the opportunity to accumulate additional savings. With these savings, individuals increase their financial cushion and are more financially ready for retirement. The obvious psychological benefit of the One More Year syndrome is the sense of security regarding running out of money.  Most see retirement as a time to rest and relax, travel, and even pursue other interests and hobbies. Working for one more year provides an opportunity to gain extra income to fund these activities and potential new hobbies. As a result, many choose to work for one more year to make life in retirement more luxurious and enjoyable.  Retiring at 47 provides fewer social security benefits than retiring at 67. While most who achieve financial independence stop working well before 67, working for one more year puts you closer to retirement age. As a result, individuals reap more social security benefits through a higher monthly social security income in retirement.  How to Overcome One More Year Syndrome? Working for one more year does have its benefits and drawbacks. For many, working for one more year despite achieving financial independence is appealing, especially if they’re far from the traditional retirement age. But we must also acknowledge one potential downside to

Reading Time: 5 minutesWorkforce changes and demographic shifts pave the way for a new working state dubbed pretirement. The concept of working until you’re 65 and then suddenly retiring has been the norm for generations. However, recently, we’re seeing that early retirees aren’t as interested in giving up on making a living and instead continue to take part-time jobs well into their retirement.  This new concept isn’t popular with every retiree, but many aren’t as comfortable giving up working again altogether. If you’re one of these people, you’re probably unaware of pretirement and what it is. If so, this guide will walk you through the concept of pretirement, what it is, and how to go about pretirement planning to make the most of your career and enjoy retirement at the same time. What is Pretirement?  Pretirement is a new working state that bridges the gap between full-time employment and retirement. In its essence, it is a flexible arrangement where you can work part-time, take on consulting or freelance projects, or start your own business while still enjoying retirement.  The state of pretirement allows individuals to continue working and earning an income while gradually reducing their workload and transitioning into full-time retirement. As a result, Pretirement offers more leisure time and less stress while maintaining a sense of purpose and fulfillment. Pretirement aims to ease people into retirement instead of abruptly halting their existing employment arrangement and going into retirement. Pretirement is positioned between traditional employment and retirement and is gaining popularity in first-world economies with aging populations. But considering the unfamiliar aspect of this concept, many early retirees struggle to go about pretirement planning.  Why is Pretirement Gaining Popularity?  As with any new or emerging concepts, it will take time before pretirement becomes the norm. While at is, we cannot say for certain that pretirement will become the new norm. With that said, pretirement is trending due to a variety of factors. Here are some reasons why people are deciding to try pretirement:  These factors aren’t the sole reason pretirement is gaining popularity in first-world economy countries with aging demographics. But it helps paint a picture of the need for individuals to continue working in some capacity. So if you’re considering trying pretirement, careful planning is crucial to making it work for you. Therefore, let’s see how to plan for pretirement.  5 Steps to Plan for Pretirement Whether you’re forced to remain in the labor force in your retirement years or want to try pretirement to escape boredom, the reality of the modern world forces many to seek working opportunities past 65. That means many are preemptively planning for working in retirement, regardless of the situation they find themselves in. Here are the steps to prepare for pretirement: Step 1: Determine Your Financial Situation The first step in pretirement planning is assessing your finances. That means assessing your income sources and savings to determine whether you can reduce your workload or take part-time jobs and gigs.  In this first crucial step, individuals must come to terms with the outcome. For those with little to no savings in their accounts, pretirement might be the only solution for a stable life in retirement.  Step 2: Assess Your Skills The reality is that old age limits your part-time employment options. Many individuals who’ve worked labor-intense jobs and lack the skills to transition to other areas will have difficulty identifying employment options like before while in retirement.  Therefore, the next step in pretirement planning is to determine what you’re good at and how to apply said skills by working part-time or freelance gigs.  Step 3: Lower Your Living Standard Whether pretirement appeals to you or not, it’s well-known that retirees don’t make the same money as they used to. So unless you have a stable investment portfolio and passive income to support your existing lifestyle in retirement, you’ll need to lower your standard of living. Determining how much, however, is nearly impossible, as unexpected costs are equally impossible to predict.  Step 4: Identify Passive Income Ideas The best way to support your lifestyle in retirement is to supplement monthly paychecks with passive income. However, again, you’ll need time to build up your passive income portfolio. Fortunately, there are options out there. For example, one of the best passive income ideas is to turn to rental properties, such as rental condos or self-storage units.  Another option is to build up a stock investment portfolio. But unlike rental properties, investing in stocks and other commodities takes years to bear fruit.  Step 5: Plan Ahead of Time It’s impossible to plan for pretirement at 65; you need years to prepare for it. This final step may be obsolete for many individuals who lack the financial capacity to support their families on a pension. But if you’ve got time, planning is key to making sure you’ve got enough money to retire while remaining in the workforce in some capacity.  Benefits of Pretirement Pretirement is more than just a solution to maintain your current income level. Quite the opposite, pretirement offers numerous benefits for individuals not ready to quit working. Here are some of the main pretirement benefits: Improved Work-Life Balance Pretirement provides more leisure time, which can lead to a better work-life balance. This allows for more time to pursue personal interests and hobbies while still working in some capacity.  Reduced Stress Pretirement can be less stressful than retirement, as you have more control over your workload and schedule while enjoying your retirement years. This can lead to better mental health and well-being. Sense of Purpose Many people find purpose and fulfillment in their careers, and pretirement allows them to continue working in some capacity. In addition, many people lose their sense of purpose while in retirement. Retirement can lead to boredom and loss of meaning in life. So one way to negate the adverse effects of retirement is to ease your way into retirement.  Continued Social Connections Pretirement allows you to stay connected with your professional network and colleagues.