Tom Mosley:

Where should I put my money in retirement? Very good question. And we get that question a lot at Mosley Wealth Management, and there’s some definite answers we’re going to try to clear up in this YouTube or podcast, ever how you’re getting this information? Hey, my name’s Tom Mosley, CEO and President of Mosley Wealth Management. Let’s try to look at this.

Tom Mosley:

Now, I grew up on a farm. I know you look at me and you’re thinking, man, he’s so suave and debonair, he must have grown up in a big city, rich people. No, I grew up on a farm where we milked the cows all the time and we used buckets all the time. There was a bucket for the cows, there was a bucket for the hogs, there was a bucket for the chickens. And we used those buckets to feed them and to make sure that we had something for everybody there.

Tom Mosley:

In financial services and in putting your money in certain places for retirement, you probably could use that concept even if you didn’t grow up on a farm and you could say, let me have some money in different buckets.

Tom Mosley:

Now, let’s talk about that today, okay? Where should I put my money in retirement? When you retire, I’m going to break some news to you carefully here, you’re still going to have emergencies. Just because your retired doesn’t mean your transmission is going to last forever. About three years ago, I had a guy came in, he was 62 years old. He had just retired from one of the big aerospace companies here in Southern California, and he told me, I’ll never forget, he says, “We just bought our last car. It’s a Buick.” And he thought that that last car from 62 might last him to 72, 82, 92, as long as he was going to live. It’s probably not. And after he gets about 50,000 miles on it’s probably going to start needing repairs.

Tom Mosley:

And if he lives in a house, which most of our people do, by the way, if he lives in a house and it rains, which sometimes it does rain in southern California, the roof’s going to leak and things are going to happen. And you’re going to have to go replace a leak and you’re going to have to get the walls painted, and hopefully your site goes away fast enough that you don’t see how dingy the walls are getting and you’re okay with it. But if you can still see, and I’m joking, you’re still going to have emergencies, you’re still going to have the refrigerator in the middle of the night start making that noise, and you’re going to have to go buy a refrigerator. And by the way, they don’t give them away anymore. And the ones you can see at the side of the road that are out for the trash to pick up, they’re just not that good, I promise you. So you’re going to have emergencies.

Tom Mosley:

Now people say, how much money should I put away in an emergency bucket? That is not a fact logical question. That is a feel question. And let me say it again, and with the feel word in there. How much do you feel like you need to put away for emergencies? I often ask people, what’s the biggest emergency you’ve ever had in your life? And people say, “Well, it rained for the first time in about a year here in Southern California, and we had to pay $17,000 for a roof.” Or “I was headed to pick up my daughter at school one day and I heard this noise and the transmission went out of my car and it cost $5,000.”

Tom Mosley:

But very few emergencies cost $100,000 or $200,000. And there’s so many people that are sitting with an emergency bucket. Let me change that. There are a few people that are sitting with an emergency bucket of 180, 200. One lady came in one time, had $480,000 put away in a money market, and we call that lazy money. It’s just sitting there. It’s not doing well for her. It’s not making her any money.

Tom Mosley:

So there can be too much money in an emergency bucket, and there can be too little money in an emergency bucket. You say, “Well, help me.” How much do you feel you need? What’s the biggest emergency you’ve ever had? “$10,000.” All right, well, let’s put 20 into an emergency bucket. But you need that money. And I think the best place to put that money is in the bank, but put that emergency bucket together and say, that’s my emergency fund. When and if, not if, when I need and when I have an emergency, it’s taken care of because I’ve got that bucket full.

Tom Mosley:

And what’s the other bucket? Most people when they retire, they’ve saved and they’ve saved well. A lot of people have different things like pensions and 401ks and IRAs and Roth IRAs and things like that. But if they retire in the mid-sixties, say at 65, and if they’re married or even if they’re single, they might live till they’re 85 or 90. So they’ve got a 20-year pressure on their savings, on what they’ve saved or a 30-year pressure on what they’ve saved. And if they’re married, somewhere along the line, one of them might pass away early. And so there’s a single person there and they’ve still got a lot of the expenses and a lot of those other things that are going on in their life. And so you can’t afford just to say, this is our money. We’ll spend X amount a year. You still need to see that money grow and you still need to see that money replenished because with inflation, you’re going to need more and more and more. So the best place to put a growth bucket is in the stock market.

Tom Mosley:

But be careful. Be careful because the stock market, though, we had 13 years of great years in the stock market. We know from 2022, the stock market can overall be down 22%, 23%, 24%. So you can lose a quarter of what you’ve got if all of your money is in a growth bucket. But you need some money out there exposed to the risk of the market so that you can also get the victory. You can’t have the thrill of victory unless you risk sometimes the agony of defeat. So you have to have some money that’s out there growing. It’s in the stock market. Or you say, well, I really don’t like the stock market. Well, maybe it’s some long term income producing vehicles that might pay you five, six or 7%, and that might be the kind of growth that you have.

Tom Mosley:

But I would say most people, most of their money needs to be in a growth bucket when they’re in their sixties. Maybe when you’re in their seventies, you can begin to plane that down a little bit. But in your sixties, you still need a bucket that’s a growth bucket. Remember, your emergency bucket takes care of emergencies and your growth bucket takes care of long-term growth so that you don’t run out of money and you continue to replenish the money, makes up for inflation and all the other things that might come to you over a period of 10, 15, 20, 25 or 30 years as you live through retirement.

Tom Mosley:

The last bucket is an income bucket. You say, well, what is that? Well, the income bucket, the base of an income bucket is social security, pensions, rentals, those kind of things. But how much more money do I need to put in that income bucket so that I can have income that is increasing for the rest of my life? There’s two ways to do it.

Tom Mosley:

There’s the way to leave it at risk, and yes, you can leave it at risk and still use the process of emergency bucket, growth bucket and income bucket. Now, what you would do here is you would take, listen very closely and you might want to back this up and listen to it again just so you get this, because I’m going to get a little bit into the weeds right here, but in an income bucket, if you still want to leave it at risk, you can put it in the market, but you can put it into some sorts of, and we have plenty of these that we work with our clients here, some kind of income producing low income duration buckets that are going to pay you a good solid three, 4%, but they’re not going to go down when the market goes down.

Tom Mosley:

You say, how much needs to be in that bucket? Usually two or three years of income. And here’s what happens. If you put two or three years of what you’re going to need extra for income in there, in the income bucket, and you draw out of that every month, that money’s not going to go down. That money’s not going to be at risk in the market. You say, well, what is at risk in the market? Remember the growth bucket we talked about? That’s still in the market. And what you’re doing is you’re saying for two, three, and some people go four or five at the most, but you say, I’ve got enough money for the next few years, 2, 3, 4, or even five years that my income’s coming from there. So if the market’s going haywire crazy bad, you know what that means, like 2022, that growth bucket doesn’t really matter because I don’t need that money for three, four or five years.

Tom Mosley:

And usually what happens in the market when it goes this way, within two, three or four years, it begins to come back and then the growth bucket begins to grow to the point that we can replenish the income bucket and still leave it at risk. So there’s ways to stay in the market with your income bucket. Just make it safe, as safe as you possibly can make it. And we have a lot of clients who use this because they say, “I really don’t want to be in an annuity.” So if you’re that way and you’re not open to looking at some of the valuable things that an annuity could produce.

Tom Mosley:

And that’s the other side. You say, I don’t want to leave that income bucket at risk. I want to secure it where it’s guaranteed, it’s insured by the insurance company to give me a certain amount of income that increases every year as the market grows. If the market doesn’t grow, it just stays the same, but it never goes down, and I have guaranteed increasing income for as long as I live and for as long as my spouse lives. And that’s where you need to look at a fixed, that it’s not going to go down, index, that it’s going to grow some with whatever the market grows, annuity that’s going to pay you out and pay your spouse out if you’re married as long as you live.

Tom Mosley:

So let me review, okay? Let me review. Where should I put my money in retirement? First of all, you need the emergency bucket. Big radio personality will tell you this is the most important thing you can do. Put the money, 15, $20,000 away because life happens, emergencies do happen. After that, you probably, if you’re in your sixties, still need some growth bucket, some money that’s in the market or is in long-term vehicles that are going to pay you something good and solid, which is, they’re hard to find right now, but there are some things out there.

Tom Mosley:

And then some of you may say, well, let me build that bucket of income where I’m going to draw for the next two or three years and leave it at risk. Or others may say, let me put the amount of money I need into an annuity so that my money is guaranteed, it’s increasing for the rest of my life and it’ll last as long as I do and it’ll last as long as my surviving spouse.

Tom Mosley:

Hey, where should I put my money in retirement? If you have that question, give us an email at info@mosleywealthmanagement, that’s, mosleywealthmanagement.com. Or you can call us at (714) 421-4288. That’s (714) 421-4288. And we can help you build a plan that puts the right amount of money for you in your feel Good emergency fund puts the right amount of money in a growth bucket that’s in the market to your risk level and puts the money into an income bucket so you know that your income is taken care of in something that’s safe and secure. Give us a call.