Created: January 17, 2021
Modified: September 23, 2022

4 Buckets of Retirement Planning

On this episode of Better Money on WFSB Channel 3, Joel Johnson, CFP® and Kara Sundlun discuss the Bucket Strategy that Johnson Brunetti follows.

Bucket 1: Taxable Assets

We pay taxes on these assets today; there is no tax deferral. This bucket is beneficial when you need to get your hand on money quick or when you need money in the short-term.

This bucket includes CDs, stocks and bonds, and Nonqualified Mutual Funds.

Bucket 2: Tax-Deferred Assets

This bucket holds 401(k)s, 403(b)s, and IRAs.

We do not pay taxes as the money grows.

Bucket 3: Income Tax Free/Estate Taxable Assets

The third bucket is home to Roth IRAs and municipal bonds. These assets are free of income tax but not estate tax.

Having tax-free income is a good thing, especially if you are in a higher tax bracket and living in a state with high income tax. With municipal bonds, you do not pay tax on interest. With a Roth IRA, you pay an initial tax, but it then grows and withdrawals tax-free.

Bucket 4: Income Tax Free/Estate Tax Free Assets

The fourth and final bucket holds life insurance trusts and charitable trusts, which are free of both income and estate tax. Usually, the people who utilize Bucket 4 are on the wealthier side and have money they’d like to pass on.

When it comes to trusts, the money grows tax-free and passes on to beneficiaries tax-free as well.

  • Sandy and Thomas C.
    Sandy & Thomas C. are clients of Johnson Brunetti and received no compensation for their statement.

    “We always felt our financial needs were in very capable hands. Alex Angst is great to work with. Our advisor always made us feel he had our best interests at heart and explained things so we could understand them.”

  • Robert G.
    Robert G. is a client of Johnson Brunetti and received no compensation for his statement.

    “We’ve been clients of Johnson-Brunetti for > 10 years. We’re enjoying a comfortable retirement as a result. Many thanks to Joel and our CFP, Eric Hogarth. I wish we had plugged into this decade approach back when we were in our 30s.”

  • Lisa D.
    Lisa D. is a client of Johnson Brunetti and received no compensation for her statement.

    “Working with Johnson Brunetti has had a positive impact on my life by providing me with the knowledge, confidence, and peace of mind to move forward with my retirement plans. The process of getting to this point, through their guidance, has been informative and pleasurable.”

  • Ken D.
    Ken D. is a client of Johnson Brunetti and received no compensation for his statement.

    “I view your company as one that puts my interests first. I think that is very uncommon and very refreshing. “

  • Jeanne P.
    Jeanne P. is a client of Johnson Brunetti and received no compensation for her statement.

    “Matt does an awesome job! So easy to understand and he listens to our concerns and addresses them! happy I chose your firm!”

  • Anonymous
    This testimonial was provided by a client of Johnson Brunetti and received no compensation for their statement.

    “I have been pleased with the help and service I have received from the company. I have met several team members on Eric’s team and have found all of them very well prepared to meet with me when reviewing my portfolio. I always feel that I am an important customer and appreciate that very much. I hope the firm continues to focus on the customer and maintains its great service. I think you do a great job for someone like me!!!! I’m happy I chose your firm!”

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