Top 3 Retirement Income Methods EXPLAINED!

In this video, Kevin Lum explores three different approaches to generating retirement income: the probability-based approach, the safety-first approach, and the bucket strategy. He also introduces the 'four L's' framework for retirement planning—longevity, lifestyle, liquidity, and legacy—and walks through case studies to illustrate the pros and cons of each method.

Kevin emphasizes the importance of reliable income sources like Social Security and the considerations of risk tolerance, inflation, and legacy goals to help viewers find the best retirement strategy for their unique financial situation.

00:00 Introduction
00:29 The Four L's of Retirement Income
02:23 Reliable Sources of Income
02:46 Case Study: Probability-Based Approach
06:27 Case Study: Safety-First Approach
13:16 Case Study: Bucket Approach
15:29 Conclusion and Final Thoughts
16:52 Public Service Announcement on Annuities
17:36 Series Overview and Next Steps

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*ABOUT ME*

I’ve always been passionate about personal finance, investing, real estate, and helping people find the freedom to live their life with purpose. But when my dad died in 2015, I tried to help my Mom find an advisor to sort out her finances. Instead of a helping hand, I found an industry of financial advisors dominated by glorified salespeople working on commission — pushing products that were not in my mother’s best interest. Or advisors with minimums that shut-out all but the ultra wealthy. Disappointed with the options, I took matters into my own hands and launched Foundry Financial, a wealth management firm with transparent pricing that specializes in helping provide clarity around money — so you have the confidence to make smart decisions.My goal is to help a million people retire without worry!

📅 *THE BASICS OF RETIREMENT PLANNING*

Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our goal is to help people master retirement and retire without worry.

Step 1: Know when to start retirement planning. When should you start retirement planning? The earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning. Even if you haven’t so much as considered retirement, don’t feel like your ship has sailed. Every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.

Step 2: Figure out how much money you need to retire, The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses will change in retirement.

Step 3: Prioritize your financial goals. Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.Generally, you should aim to save for retirement at the same time you're building your emergency fund — especially if you have an employer retirement plan that matches any portion of your contributions.

Step 4: Choose the best retirement plan for youA cornerstone of retirement planning is determining not only how much to save, but also asset allocation. It can make a massive difference in your retirement plan.

Step 5: Select your retirement investments. Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of investments depends on how long you have until you need the money and how comfortable you are with risk. It’s often helpful to talk with an adviser to discover the right mix of stocks and bonds.

❣ *SPONSORED* No, this video was not sponsored.

⚠️ "DISCLAIMER:⚠️This is not financial or investment advice. This Channel is meant for EDUCATIONAL AND ENTERTAINMENT PURPOSE only. None of this is meant to be construed as investment advice, it's for entertainment purposes only. #retirementplanning #retirement #passiveincome

[JTlite]

Great info, clear, good outline. Many thanks

[Growing-Our-Retirement]

Great video, one of our buckets is a rental property. Very stable income, occasional expense surprises, excellent long term inflation hedge.

[julieboehme]

I watch these types of videos and get a little frustrated. I can't imagine spending a whopping $10, 000 a month and I am still working! I'm 62 and trying to figure out if I can retire on $500, 000 and when to start SSI. I don't need to leave any money behind for children. I currently live a good life and sock away money netting just $3300mo on my job. Where's that video?

[Sylvan_dB]

I quite like the buckets approach. I've been very disappointed, however, in the scholarship I've seen discussing buckets. Many financially savvy people are opposed to buckets, and to illustrate they erect a rebalancing based approach to refilling the buckets, and then proceed to tear it down. Christine at Morningstar has some good articles on buckets, but not to the level I'd consider scholarship. Ray Lucia of course has a lot of bucket content, but again very light on scholarship.

Is there any scholarship of similar quality to Bill Bengen's Trinity study, relating to a bucket-based portfolio approach including rules to manage the portfolio?

[thomasmoshier]

A pension works like an annuity. Let your pension and SS do the heavy lifting in retirement. Then supplement that income with your IRA. Too often financial advisors recommend a lump sum rather than monthly payments from a pension. Of course they do, more money under management, higher commissions for them. If your return rate is greater than 6%, and most are and you’re in good health, take the monthly installments.

[mark]

What was the internal rate of return of the annuity?

[Bill-vkfh]

Good video Kevin. The bucket strategy is a "feel good" strategy that makes you define rules on when to refill buckets. Most would be better off financially (but maybe not emotionally) using a simple rebalancing strategy.

[trackguy]

What about the reverse glide path? That is gaining popularity.

[johngill]

A fee only annuity? What?

If you are going to get an annuity
1. A MYGA for a CD like investment
2 A single premium immediate annuity for a penion like insurance
3 A deffered immediate annuity for longevity insurance

[danho]

hi Kevin, we are planning to retire in 3 year from now at 65, i am investing 401k in T rowe Price, the T rowe price is talking about Managed Payout Program of the T rowe price retirement trust., what do you think about this? what is pros and cons Thank

[ftrkhan]

Hi. Thankls for useful informartion. My date of birth is Novemvber 21, 1955 ad i did not file for ss benefits waiting on full retirement benefits. November 21st 2025 I will be 70. Will you please tell me when shouold I apply to take full retirement benefits.

[chip]

With $300k in cash, which is 2 1/2 years of living expenses, and no debt, why would you not be 100% invested in a smart mix of equities?

[HondaRally]

Thank you Kevin, great video, I learned a lot. One question, if you buy the annuity for 500k at 7.5 % is the entire principal of 500k still there at your death to leave to your children? Thank you

[petehanley]

When you said “sequence of returns risk “, the text you or someone put up said “secrets of returns risk “. Fix that.

[CalmerThanYouAre]

For me, 2-3 years of cash or short term treasuries (10%), and the rest in a basket of broad market index funds (90%). 4-6% withdrawal rate with guard rails.

Add to that income from a few rental properties. Then SS according taken according to what the market does and what makes sense from a tax perspective.

Paid off, down-sized house. Low ratio of fixed expenses relative to total expenses. Should be able to handle just about anything. Big garden and lots of ammo just in case we can’t! 👍🏻

[BigPoppa-tz]

Question. Where are the 75 percent of us going to get all these buckets of money from. ?

[kelb]

I have been told a million times the vast majority of Americans only have enough money saved to live for 6 months. Yet all the financial guru's scenarios are always based off of 2 to 3 million dollar worth, so I just shut the videos off

[carlyndolphin]

You need 5 million to retire early comfortably. 3% withdrawal would provide 150K per annum before taxes. It’s still not a luxury lifestyle. I spend 7, 000 to 15, 000 per month.

My asset allocation is

40% commercial / real estate
50% global ETF
10% money markets.