One of the most common concerns I hear from clients these days is about retirement. Many people approaching this next phase of life are feeling nervous—and understandably so. With today’s market volatility, rising costs, policy changes, and uncertainty around Social Security, it’s hard to know if it’s the “right time” to retire.
Here are three key areas to focus on:
1. Use the Bucket Strategy to Align Investments with Time Horizons
One of the smartest things you can do as you approach retirement is to organize your savings based on when you’ll need the money. This is where the “bucket strategy” comes in—a simple and effective way to divide your retirement savings into short-term, mid-term, and long-term buckets.
Short-term bucket (0–3 years):
This is your cash reserve, set aside to cover day-to-day living expenses in the early years of retirement. The goal is to keep this money stable and out of the market, so you’re not forced to sell investments when markets are down.
How to calculate it:
Start by estimating your monthly expenses. Subtract any guaranteed income you’ll receive, like Social Security or a pension. The remaining amount is what you’ll need to withdraw from your investments.
Example:
Monthly expenses: $5,000
Social Security: $2,000
Pension: $500
Remaining needed from investments: $2,500/month
Multiply that by 12 to get your annual need—$30,000 in this case—and then multiply that by 2 to 3 years. You’ll want to set aside $60,000 to $90,000 in a high-yield savings account, CDs, or a money market account.
Mid-term bucket (3–10 years):
This bucket kicks in after your short-term funds are used. It’s invested more conservatively to provide income and some growth. A balanced portfolio with a mix of bonds and conservative stocks is a good fit here.
Using the same monthly need ($2,500), multiply by the number of years you want to cover—typically 7 years. That gives you around $210,000 for this bucket.
Long-term bucket (10+ years):
This is your growth bucket—money you won’t need for a decade or more. It should be invested in a diversified portfolio with enough growth potential to outpace inflation over time.
This approach helps ensure you have the right money in the right place at the right time—and gives you the confidence to ride out market swings without panicking.
2. Review Your Guaranteed Income—Starting with Social Security
Social Security is the foundation of income for many retirees, but it’s not as simple as turning 67 and watching a deposit show up in your bank account. You have to apply, submit documentation, and wait for approval—and that wait is getting longer. The Social Security Administration (SSA) is undergoing major staffing cuts, with over 7,000 employees expected to be let go. Delays in processing benefits are already common, and many people are surprised to learn that they may need original documents like marriage or divorce certificates—and that only 25% of applications can be completed fully online. If you’re planning to file soon, set aside a few months’ worth of cash reserves to cover any delay. Also, take these three steps now to protect your benefits and avoid surprises:
1. Set up your mySocialSecurity account: Go to SSA.gov and create your account. This links your identity to your Social Security number and helps protect it from fraud.
2. Download and review your current statement: Make sure it includes your most recent earnings (look for 2024 income), and save a copy. Review it for accuracy—it’s your snapshot of future benefits.
3. Access and save your full earnings history: Go beyond the basic statement. In the “Eligibility and Earnings” section, download your complete record of earnings. This is your proof of decades of FICA contributions and can help resolve future disputes.
3. Plan for Long-Term Care—Because This Is What Breaks the Plan
People often worry about market volatility, but that’s rarely what breaks a retirement plan. More often, it’s the unplanned, high cost of long-term care. More than half of retirees will need some form of long-term care—and it’s expensive. According to the 2024 Genworth Cost of Care Study, the median annual cost for assisted living in New England is $89,175, and a private room in a nursing home costs $157,680 per year.
Many people mistakenly believe Medicare will cover these costs—it won’t. That’s why planning ahead is critical. Look into long-term care insurance, hybrid life/LTC policies, or setting aside funds specifically for care. Talk with your family about your wishes, and consider consulting a care manager or eldercare professional to understand your options. Ignoring this part of the plan is like playing with financial fire. Don’t skip it.
Final Thoughts
There’s no way around it—these are uncertain times. But your retirement doesn’t have to be. With a thoughtful, flexible plan that aligns your investments, secures your income, and accounts for long-term care, you can move forward with confidence—even in a less-than-perfect world.
It’s not about predicting the future—it’s about preparing for it.
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