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The 321 Retirement Plan

Season #2

As odd as it may seem, there are moments in the realm of finance when a sense of novel curiosity overtakes me. One such moment revolves around this nifty little arrangement I've devised, known as the 3 21 Plan. If you find yourself scratching your head, wondering about the relevance of these numerals, worry not! This is no complex mathematical theorem or a secret code to unlock some mysterious treasure.

You see, the 321 Plan is a concept, an idea, birthed from my own experiences and observations over the last decade and a half. It's a retirement strategy I've tailored over the years, aimed at providing layered safeguards for your golden years.

You might question, why this sudden emphasis on protection? And to that, I respond: Uncertainty. Our world teems with unpredictability. We stand clueless on what tomorrow holds - be it the future actions of the Federal Reserve, the legislative decisions of Congress, or the identity of our next President. In the face of such ambiguity, one thing that we can and should control is our retirement plan.

Having been fortunate enough to spend the last 15 years immersed in the world of retirees and financial advisors, my life's work, I've gleaned invaluable insights. These interactions have crystallized certain truths about retirement, consistent patterns that guide the decision-making process towards fruitful results.

A Foolproof Formula

Now, this isn't to say there's a foolproof formula that guarantees an ideal retirement. What it means, though, is that a structured approach, coupled with some fundamental principles, can significantly enhance the likelihood of better outcomes.

In this context, I've taken the liberty to distill my experiences, my observations, my insights into a comprehensive process – the 3 21 Retirement Plan. This is not merely a financial strategy; it is a philosophy that encapsulates the wisdom gleaned from countless conversations, experiences, and observations. It’s my way of ensuring that we are all able to navigate our financial futures with a bit more certainty, no matter the unexpected turns the world might throw at us.

What Is The 321 Plan

Indeed, you've hit the nail right on the head! The numbers in the '3 21 Plan' aren't just arbitrary; each digit signifies a core component of the plan.

Let's start with '3', shall we? The '3' in our plan symbolizes the need for three tiers of diversification. But before you jump to the conventional understanding of diversification - a balanced mix of stocks and bonds, allow me to elucidate a slightly different perspective.

Yes, diversifying your assets is undoubtedly essential. However, in the 3 21 Plan, we consider a far more temporal dimension: time. To be precise, we emphasize dividing your retirement corpus into three distinct time-based categories or buckets, if you will.

You might have come across similar bucketing theories offered by other financial advisors. Our version is a nuanced interpretation of this bucket approach.

Here's how it works: Envision your retirement savings in three distinct buckets. The first bucket is for the near term, which would comprise money you'll need for the next three to five years. The second bucket holds the funds you'll rely on for the subsequent three to five years. Finally, the third bucket is reserved for long-term use, extending well into the future.

This temporal stratification of your retirement savings offers a myriad of benefits. For starters, it simplifies your decision-making process by categorizing your retirement fund based on their respective time horizons. Such a structured division inherently builds in a layer of protection for your retirement plan by enabling easier and more informed decision-making.

For instance, the manner in which you'd invest the money you'll need for the next few years will naturally differ from the approach you'd take for funds you won't touch for the next two decades. This initial step in the 3 21 Plan lays a robust foundation by providing you with a clearly delineated structure for your retirement savings.

So, the '3' in our 3 21 Plan, ladies and gentlemen, encapsulates the philosophy of a three-tiered, time-based diversification of your retirement corpus. It's all about safeguarding your future, all while keeping the present well within sight.

Two Layers of Diversification

The magic number '2' in our plan is the next layer of our retirement strategy. It stands for the indispensable need to embed at least two forms of protection in your plan, a dual shield, if you will. Now, before we dive deeper into what this means, let's take a quick detour into the world of investments.

When you think of investments, you probably imagine a chessboard with two major pieces - stocks and bonds. Why these two, you might ask? Diversification is the answer. When stocks plummet, bonds often serve as a safety net, preventing your portfolio from taking a free fall. Conversely, when the bond market suffers, your stock holdings can cushion the blow. This mix, in theory, smooths your ride through the volatility of the market.

However, life isn't as straightforward as theory, is it? There are times when the protective cocoon of diversification doesn't quite hold up. And that's where the essence of '2' in our 3 21 Plan comes into play.

This '2' prompts us to take a step back and question every financial decision we make. It implores us to challenge our assumptions, to question our choices, and to envisage the scenario where we might be wrong. For instance, say you invest in treasuries or CDs or even dividend income. But what if your perception of the future doesn't align with reality? What's your backup plan? What's your safety net?

In the construction of our 3 21 Plan, for each of these three time-layered buckets, we advocate building in at least two layers of protective measures. This dual shield ensures a diversified approach in decision making. It keeps us on our toes, forcing us to think of contingencies and prepare for eventualities.

One Written Plan

Finally, we arrive at the linchpin of our 3 21 Plan, the number '1'. This single digit stands for an unshakeable tenet – you need to have one comprehensive, written plan for your retirement. And it's not a static document, rather it should be revisited and updated at least annually.

A well-drafted plan serves as a blueprint of your retirement journey. It should succinctly detail what you're doing, why you're doing it, and most importantly, where your money is at any given time. The plan should shine a light on which portion of your savings you plan to spend first, and which follows.

This roadmap should also spell out your strategy for entering and exiting the market. It should guide you on when to harvest your gains, when to transition your funds from one bucket to the next. Above all, your plan should offer crystal-clear clarity. A lack of this clarity might push you to make impulsive decisions based on convenience rather than careful consideration.

It's these hastily made decisions, when compounded over time, that end up wreaking havoc on your retirement plan, often leading to a scarcity of funds in retirement. The tiny missteps that appear insignificant can indeed morph into massive pitfalls.

To make sense of this, let's consider an individual - let's call him 'Client A' - who is fifteen years away from pulling the retirement trigger. Client A has been toying with the idea of retirement but still has a decade and a half to finalize his decision.

Guiding him through the 3 21 Plan, we'll first address the '3' - the three distinct time-based categories for his savings. We'll explain the '2' - ensuring that we have at least two forms of protection in place for every financial decision he makes. And finally, we'll draft the '1' - his one comprehensive written plan that outlines his financial journey leading to and through his retirement.

Remember, my dear friends, the essence of the 3 21 Plan is not only about managing your finances. It's about orchestrating a harmonious symphony between your life's aspirations and financial realities, ensuring you stride into your golden years with confidence and tranquility.

Implementing Your 321 Plan

At YieldsForYou.com, we've tailored our resources to accommodate different learning preferences and help you thoroughly understand and implement the 321 Retirement Plan. If you prefer reading, there's a comprehensive guide that walks you through every step of incorporating this plan into your life. If you're more visually inclined, we've created a series of concise videos, each no longer than five minutes, which explain the process in a step-by-step format. For those of you seeking a more automated approach, we offer an online guided wizard that will assist you in creating your personal 3 21 retirement plan. Our aim is to ensure this information is accessible and easily understood, no matter your learning preference.