Laddered Buckets Can Maximize Retirement Options

By |2020-04-17T18:00:25+00:00August 15th, 2019|Retirement Planning|

“Laddered funds” to assure retirement assets are safe, growing, and accessible as needed for decades to come.”


Imagine you are standing on the ground looking up at a 30’ tall building. You need to get to the top of the building, but you don’t have a 30’ ladder. You do, however, have THREE 10’ ladders. So, how do you get to the top?

Answer: you climb the first 10’ on the first ladder and bring then other two ladders with you. When you get to the 2nd story, you climb that 10’ with the 2nd ladder and carry the 3rd ladder up with you. You use the 3rd ladder to get to climb the last 10’. You’ve arrived on top!

That is an over-simplification of a financial scenario that many retirees must understand.

In this example, you split your available retirement funds into three “buckets”—one to use immediately, or the near future; the 2nd bucket for a strategic point in time during which you know you’ll need additional funds; and the 3rd bucket of money, in the case, is allowed to grow for many years to use late in life. All your buckets are secure from market volatility and risk and grow at a guaranteed minimum rate with the potential to earn double-digit growth. Again, this is with 100% safety of principle, no downside market risk, and access to your funds as you need them.

You could use two “ladders,” or three or four, whatever makes sense for your particular situation. The key is to provide funds for the present as needed while future funds grow and remain available for the future as your needs change.

When dealing with Federal Retirement Benefits, laddering becomes especially important. Your FERS Supplement expires at 62, at the time you are eligible to commence minimum Social Security benefits. But most retirees realize that waiting to take SSA benefits increases 8% for each year you can defer taking payments. 8% is a substantial increase! Therefore, when other sources of funds are available, it often makes sense to defer SSA and use your additional cash to manage the “retirement income gap.”

A good “first ladder” provides funds to meet any income/expense gap until 62 (or longer), or until it is all used up. A 2nd ladder provides the funds to allow you to defer SSA benefits comfortably, take up the slack for the FERS Supplement which has ended at 62, and pays out a comfortable amount until you elect to start SSA at FRA (67) or even later. But this 2nd ladder keeps on paying you for life, also after you commence SSA benefits.

Now, your 3rd “bucket of money,” or ladder, has been steadily growing for 10, 15, maybe 20 years. You have never lost a dime to market craziness and volatility. Your initial principal amount has doubled or even tripled in value. At the time you decide appropriate, you activate your guaranteed lifetime income rider for this 3rd account (bucket) and start collecting on that one, along with bucket #2…plus Social Security …plus your FERS annuity. All these income streams keep paying for life! If one dies, the surviving spouse continues to collect on ladders #2 and #3. When the surviving spouse dies, any remaining cash in the respective accounts goes to the named beneficiaries.

Accounts can be accessed at any time without waiting, but withdrawing funds reduces the future benefit available.

A well-conceived, properly structured “retirement ladder” provides the flexibility, security, and growth for younger retirees to live a long and worry-free retirement.


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About the Author:

As a speaker and published author on a variety of retirement income topics, both for the private sector and for federal employees, Jim stresses the importance of financial education through his writings and the seminars he offers. At the core of his philosophy and business approach is the belief that “retirement money should not be put at risk…nor does it have to be to get what you need”. Website:

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