{"id":2601,"date":"2023-10-06T10:00:00","date_gmt":"2023-10-06T10:00:00","guid":{"rendered":"https:\/\/www.marzanocapitalgroup.com\/?p=2601"},"modified":"2023-10-06T18:57:27","modified_gmt":"2023-10-06T18:57:27","slug":"the-importance-of-multiple-buckets","status":"publish","type":"post","link":"https:\/\/www.marzanocapitalgroup.com\/the-importance-of-multiple-buckets\/","title":{"rendered":"The Importance of Multiple Buckets"},"content":{"rendered":"\n

We save money for different purposes; retirement, travel, unexpected expenses, home renovations, etc. Here at Marzano Capital Group, we are big proponents of the \u201cmultiple bucket approach\u201d.\u00a0 Different buckets (or savings vehicles) should be used for different purposes.\u00a0 Here are the different buckets I am referring to:<\/p>\n\n\n\n

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  1. Emergency Fund \u2013<\/strong> There is no exact science when it comes to how much money you should have in your emergency fund.\u00a0 As a rule of thumb, at least 3-6 months of expenses would be a good starting point and on the higher end if you have a single income household.\u00a0 This bucket is important because it serves as protection, so you do not have to dip into retirement savings or investments that are allocated for something else when unexpected expenses arise.\u00a0 A basic savings account or money market are suitable for this bucket.<\/li>\n\n\n\n
  2. Pre-tax retirement \u2013<\/strong> Common accounts within this bucket are: 401(k), 403(b) and Traditional IRA (Individual Retirement Account).\u00a0 Most employers offer a retirement plan as part of the employment benefits package.\u00a0 Usually, this retirement plan comes with an \u201cemployer match\u201d that helps the employee accelerate their savings on a pre-tax basis (qualified savings).\u00a0 This is a great tool and one you should take advantage of, especially if a match is offered. \u00a0IRAs are non-company sponsored accounts that you can open and fund on your own. \u00a0There are contribution limits on these types of retirement accounts and the earliest you can access this bucket without penalty is age 59 \u00bd.<\/li>\n\n\n\n
  3. Roth \u2013 <\/strong>This bucket could be in the form of Roth IRA or Roth 401(k).\u00a0 Roth savings are done on an after-tax basis and while there is not a tax benefit during the accumulation stage, the tax-free nature of all withdrawals after age 59 \u00bd can prove to be impactful.\u00a0 This means all of your contributions AND all of your gains will be tax free.\u00a0 There are contribution limits for Roth IRAs and the earliest you can access this bucket without penalty is age 59 \u00bd as well.<\/li>\n\n\n\n
  4. Non-retirement \u00a0\u2013<\/strong> These accounts can be in individual name or joint name and have several key components.\u00a0 The first is liquidity.\u00a0 With non-retirement accounts, you can access your money without penalty at any time.\u00a0 You may owe some taxes on withdrawals, depending which investments are sold to produce the money you need.\u00a0 Secondly, there are no minimum or maximum contribution limits.\u00a0 Therefore, you can fund non-retirement accounts with after-tax dollars at a comfortable level within your budget.\u00a0 Often when someone retires before the age of 59 \u00bd, it is the money in their non-retirement account that bridges the gap between their last paycheck and social security and\/or retirement account distributions.\u00a0 A lot of people have goals for retiring in their 50\u2019s but fail to have a plan for how they will accomplish this.<\/li>\n<\/ol>\n\n\n\n

    All of these buckets\/accounts are important and serve a certain purpose.\u00a0 By utilizing each one of them, it can help keep you from using the wrong ones at the wrong times.\u00a0 We would be happy to help you navigate which buckets you should be adding to and help determine the savings rate for each one.<\/p>\n\n\n\n

    Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 \u00bd may result in a 10% IRS penalty tax in addition to current income tax. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 \u00bd or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.<\/em><\/p>\n\n\n\n

    Securities offered through LPL Financial. Member FINRA\/SIPC. Marzano Capital Group is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance LLC, a registered investment advisor. Independent Advisor Alliance is a separate entity from LPL Financial.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    We save money for different purposes; retirement, travel, unexpected expenses, home renovations, etc. Here at Marzano Capital Group, we are big proponents of the \u201cmultiple bucket approach\u201d.\u00a0 Different buckets (or savings vehicles) should be used for different purposes.\u00a0 Here are the different buckets I am referring to: All of these buckets\/accounts are important and serve […]<\/p>\n","protected":false},"author":7,"featured_media":2602,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","compliance_id":"","post_disclaimer":"","footnotes":""},"categories":[86],"tags":[],"_links":{"self":[{"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/posts\/2601"}],"collection":[{"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/comments?post=2601"}],"version-history":[{"count":2,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/posts\/2601\/revisions"}],"predecessor-version":[{"id":2604,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/posts\/2601\/revisions\/2604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/media\/2602"}],"wp:attachment":[{"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/media?parent=2601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/categories?post=2601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.marzanocapitalgroup.com\/wp-json\/wp\/v2\/tags?post=2601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}