506: The Surplus Bucket Strategy: A Way to Spend More Confidently in Retirement
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Jun 20, 2025
Discover how retirees can manage spending confidently without relying solely on annuities. Learn about the dynamics of underspending and the innovative ‘Surplus Bucket’ strategy to effectively allocate surplus assets. The discussion covers how the funded ratio can influence your income plan and the balance between enjoying savings and leaving inheritances. The importance of personalized financial strategies tailored to individual values is emphasized to enhance overall retirement satisfaction.
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insights INSIGHT
Guaranteed Income Boosts Spending Confidence
Retirees tend to underspend due to lack of confidence in their financial longevity.
Guaranteed income increases spending confidence by providing steady funds.
insights INSIGHT
Retirees Prefer Spending Over Leaving Money
Most retirees want to spend their savings rather than die with a large inheritance.
They often underspend due to uncertainty, not a desire to leave money behind.
insights INSIGHT
Using Funded Ratio to Manage Spending
The funded ratio compares current assets to the present value of spending liabilities to assess retirement funding.
When this ratio exceeds 150%, excess assets can be moved to a surplus bucket for discretionary spending.
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If you're like many retirees we meet with, you may struggle to spend confidently in retirement, even when you've saved enough. Here, we explore a potential strategy: an alternative to the annuity-based "License to Spend" model.
In this episode, we discuss:
The dynamics of underspending in retirement
How to apply the “Funded Status Metric” and “Surplus Bucket” to your income plan
Pros and cons of leveraging this strategy
A refresher of the “Funded Ratio”
How to find an income strategy that aligns with your values
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📅SCHEDULE YOUR PERSONAL FINANCIAL REVIEW: Book a 15-minute call with Howard Bailey Financial to see how the topics discussed here apply to your individual situation: https://bit.ly/3T6oNDB
ABOUT HOWARD BAILEY FINANCIAL: Our mission is to help others gain clarity in purpose and elevate meaning in their lives through personal and practical financial strategies. Our Retire With Purpose™ Framework starts with establishing your unique financial philosophy — the true meaning and purpose for your money in retirement. Through continued education, one-on-one meetings, and a comprehensive team planning approach, we have helped retirees across the country secure their financial futures. And while we can't work with everyone, our goal is to provide value to everyone we meet. Our team of advisors and support specialists strive to deliver the very best experience in pre-retirement and retirement planning. Learn more about our process here: https://howardbailey.com/our-process
Retire With Purpose - The Retirement Podcast