Multiple Bucket Retirement Planning

You are presenting a hypothetical situation where there is $250,000 of available savings, the client is age 70 and he has the following objectives:
Wants $12,000 of annual income.
Wants that income adjusted for a 2% rate of inflation.
Wants to be certain he will never run out of money (income will never stop).

With the Multiple Bucket Retirement Planning approach the client would divide the $250,000 in to three amounts or buckets.


The first bucket will hold money and distribute income for a period of five years. During this period we will assume that the money in this bucket earned a 4% rate of return. The money in this and the other buckets can be invested in anything that the client prefers but that investment must earn a 4% ROR in order to make this example valid. (Some clients may want to consider placing this money in an immediate annuity with a 5 year income payout period.)
The second bucket will hold money (grow without distributions) for a period of five years and then the money in this bucket will be used to provide income for another five years (total of 10 years). Like the first bucket, the money in bucket #2 can be invested in anything but that investment must earn a 5% ROR in order for this example to be valid. (The reason we are assuming that bucket #2 will earn more interest than bucket #1 is because it will be held for a longer period of time. Ten years as opposed to five years. (Some clients may want to consider placing this money in a fixed rate deferred annuity that will allow the client to surrender without penalty or to annuitize the contract after five years.)
The third bucket will hold money (grow without distributions) for a period of ten years and then the money in this bucket will be used to provide income for another five years (total of 15 years). Like the first and second buckets, the money in bucket #3 can be invested in anything but that investment must earn a 6% ROR in order for this example to be valid. (The reason we are assuming that bucket #3 will earn more interest than bucket #1 or #2 is because it will be held for a longer period of time. Fifteen years as opposed to five years for bucket #1 or 10 years for bucket #2. (Some clients may want to consider placing this money in a deferred indexed annuity that will allow the client to surrender without penalty or to annuitize the contract after ten years.)

Based upon the objectives of the client in this hypothetical example and the rates of return that we have assumed for the three buckets, the client would need to place $53,422 of his total funds ($250,000) into bucket #1.

Based upon the objectives of the client in this hypothetical example and the rates of return that we have assumed for the three buckets, the client would need to place $46,214 of his total funds ($250,000) into bucket #2.

Based upon the objectives of the client in this hypothetical example and the rates of return that we have assumed for the three buckets, the client would need to place $150,364 of his total funds ($250,000) into bucket #3.

The amounts in the three buckets equal $250,000.

The $53,422 in bucket #1, earning a rate of return of 4% should be able to provide an annual income of $12,000 (the clients objective) if both interest and principal were used. The concept behind the Multiple Bucket Retirement Planning approach is that by the end of five years there would be no money remaining in bucket #1. All of the earnings and principal were used to provide the $12,000 of annual income.

Because a large portion of the $12,000 of income received by the client was a return of his principal, only a small percentage (the amount from earnings) is subject to income tax.

After five years there is no remaining money in bucket #1 to provide the continuation of income.

However, during this initial five years the money in bucket #2 was growing. At our assumed rate of return of 5% the $46,214 that was initially deposited into this bucket would have grown to $58,983 by the end of five years.

This $58,983 can be used to “refill” bucket #1.

With $58,983 now in bucket #1 and assuming again that this money will earn 4%, it should be able to generate an annual income of $13,249 over another five year period of time. $13,249 is the equivalent of the client’s $12,000 objective income after adjusting for a 2% rate of inflation. Again, the $13,249 income is made up of both interest and principal.


Because a greater portion of the income over the second five year period is made up of interest earnings, a greater portion will be subject to income tax. But keep in mind that any income that is made up of a return of the client’s principal is not taxable income. This means that a large percentage of the income is nontaxable.

After 5 more years (10 years from the start) there is no remaining money in bucket #1 or bucket #2.

However, during this initial ten year period the money has been growing in bucket #3. Assuming a 6% return the $150,364 that was originally deposited to this bucket has grown to $269,272 by the end of ten years. Consider that this is greater than the $250,000 that the client started with. Not only does he have more money than he started with but he received a relatively large amount of income over the ten years. Further consider that a large portion of the income received was not considered taxable income.

The client could then take some of the money in bucket #3 and use it to “refill” bucket #1 with enough money to provide an inflation adjusted income for another five year period.

The client could also take some of the money in bucket #3 and use it to “refill” bucket #2 with enough money so that it could grow for five years and then provide income for another five year period

There should be enough money so that in addition to refilling bucket #1 and bucket #2 there is still money remaining in bucket #3. In fact there should be enough money in all three buckets so that the entire process can be repeated over another 15 year period.


The client has a total of $269,272 in his three buckets. He is now age 80. And, he has the peace of mind that comes with knowing that he will have a continuation of an inflation adjusted income and that he will never run out of money.

Seminar Attendees Quality Appointments that Stck

Quality Appointments that Stick
Start with who you invite and how
don’t telemarket
young people--high cancellation rate
eaters--high cancellation rate

If you telemarket to fill a seminar, those attendees are less committed than people who decide to come on their own from a mailing or insert in the newspaper. These people will have a high “no show” rate at the seminar as well as cancellation of appointments
People working (as opposed to retirees) will have a higher cancellation and no show ration because they will have things come up in their life and they also do not keep their word as well as older people
If you feed people, 50% of the people come for the food. You may get them excited enough to make an appointment at the seminar but they will have a high cancellation rate after because their initial interest and commitment was weak

Quality Appointments that Stick
The presentation
have them like you--Marcus Welby
show you are their friends, others are the enemy

People make appointments with those they like and trust. Therefore, get people to like you:
Speak clearly
Smile
Tell stories or jokes
Dress nice
Seem approachable
Be polite
Shmooze before the talk starts
Thank people for their questions and complement them
Show them why other advisors and Wall Street are against them
I also was duped by bad research
1.Many advisors don’t explain this well to their clients but it’s important for you to know that
2.I think Wall Street hides this and should tell you this clearly
3.I don’t know if the mutual fund companies have your best interest in minds—let me show you how this really works…

Quality Appointments that Stick
Get commitment at the seminar
Specific time and day, within 2 weeks
The must request of you
Remove fear/provide incentive
Mention fee if possible
Tell them what happens at the appointment
No forms to fill out--tax return and statements

Have them sign up for firm appointment at the seminar—do not ask sensitive questions on your form
Remove fear that they get stuck in a high pressure sales pitch
An incentive is not a financial plan or financial review or some software on a diskette or a book
Make the appointment scarce (fee is possible)
Take mystery out of appointment
Don’t make them fill out forms or you create a barrier to the appointment

Quality Appointments that Stick
After the seminar
YOU confirm next business day at 8 am
send printed confirmation
assistant confirms day before

First Appointment
Goals is to set a second appointment
Limit to 60 minutes--don’t give away solutions
5 minutes rapport
Ask what hot buttons are
50 minutes --emotional questions
5 minutes to get commitment to next appointment
Don’t sell a financial plan
Get a fee
Learn how to conduct an interview at

Here are some of the lessons from the Spin Selling Research:
“Investigating is the most important of all selling skills and it’s particularly crucial in larger sales.”
“There is a clear statistical association between the use of questions and the successes of the interaction. The more you ask questions, the more successful the interaction is likely to be.”
Types of questions:
•Rapport questions
•Background questions
•Feeling questions
•Impact questions
•Solution questions
Forget about fact finders
Forget about telling except for generalities
30% you speak, 70% they speak
Emotional fact finding starts with:
“What are your questions or concerns that we should make sure and address today?”
What do you feel I can do for you?
Must take prospect general answers and move to specific
Get a commitment or contract before second meeting
Get a fee by stating benefits


Why You Lose Sales
Presenting solutions too early
Not asking enough questions – shooting in the dark
Not asking feeling and impact questions
Guessing
Having a "product" agenda rather than a "client" agenda
You job is not to convey your superior knowledge—this has you talk too much
Your job is as psychologist—to uncover want people WANT

Author:Larry Klein

Get Leads From Seminars

Whenever a particular interest group, home-related business associations, or any other group set up seminars, they usually go out of their way in order to get sponsorship and the like. While it may seem unlikely that you will get anything out of sponsoring a seminar, think again! Moreover, you can get the most out of a seminar without even sponsoring the event yourself.
Let’s talk of sponsorships in events first. By giving the organizers a required amount of money, you will be given advertising mileage and marketed as the company who made the seminar possible. This makes your real estate venture very attractive not only for potential customers, but even for people who are impressed and may refer you to one of their friends. Sponsorship also gives you the benefit of setting up a booth within the vicinity of the seminar, where guests can approach and find out more about what you offer before and after the seminar, or in-between seminar breaks. With a booth set up, you have a clear avenue for which leads can come up to you and ask questions. In return, you have the opportunity of giving a winning sales pitch to convince them of your real estate venture’s merit, or simply ask for their information should they want additional informative materials on your company. Because people are currently experiencing great fatigue from being sent padded and impersonal brochures through postal and electronic mail, you’ll be surprised at how responsive they would be to an interactive and personal sales talk that you can give through this seminar side.
The key to getting the most out of sponsoring a seminar is identifying which seminars are worth sponsoring. First, you may want to sponsor something that is at least remotely related to real estate. This way, you will have people flocking to an event who are already personally interested in real estate. This will make it much easier to convince leads to provide you their information or become a potential client in the future.
Choose seminars that invite people who are within your financial target market. It’s difficult to convince a buyer of a service he or she cannot afford. Also, try to be part of an event that is going to be attended by a large sum of people.
If you are simply attending a seminar, sit alongside people who have slight inclinations towards real estate. This way, it will not be difficult to get their attention. Always bring with you a brochure and your card to give away to the person sitting next to you just in case he or she may be interested in your service.
Submitted By: David Riewe
About the Author
Discover How To Generate Real Estate Leads Like A Pro http://www.free-online-course.com/realestateleads