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“If we talk to people … first we say, ‘Would you like to make sure that you don’t outlive your savings?’ They say, ‘Oh, I’d love that.’ If we say, ‘Would you like to have your own personal pension and get a paycheck for life?’ ‘Oh, I’d love that.’ ‘Would you like an annuity?’ ‘No, I don’t want one of those.’ And we just described what they wanted.”
The above comments from a researcher and non-profit executive highlight the truth many of us know firsthand: There’s a deep disconnect between what retirees say they want and how they react when they hear the word annuity.
So, the question becomes: How do we give clients what they’re truly looking for — income certainty, simplicity, peace of mind —without triggering the very resistance that shuts the conversation down?
That’s the problem we sought to address when creating The Four Buckets: a simple, client-friendly framework designed to clarify the planning conversation, reduce emotional friction, and yes, implement more annuities for clients.
The Four Buckets is both a framework and a planning process that is built around how retirees think about their money, from the way they categorize it in their head to the emotions they feel about different assets they own.
The Framework
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Bucket 1: Cash Reserves
This is money for the near term — typically 6 to 12 months of spending set aside in checking or savings. It provides comfort, control, and liquidity. Clients intuitively understand this.
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Bucket 2: Earned Income
Think Social Security, pensions, and part-time work. It’s the most beloved source of retirement income — stable, recurring, and predictable. Highlight these strengths.
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Bucket 3: Secure Income
In Bucket 3, we look to pair additional sources of guaranteed income alongside what’s already in Bucket 2. But here’s the key: we don’t use the word “annuity” yet. Instead, we focus on shared characteristics: steadiness, market-resistance, lifetime.
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Bucket 4: Growth & Legacy
This is where longer-term investments live — money designed to outpace inflation, preserve optionality, and support legacy goals.
Framework and Process: Why Both Matter
The Four Buckets is the road you and the client walk together. That said, how you walk it is just as important as the map. Any advisor can see the intuitive logic: Buckets 2 and 3 are used to build a guaranteed monthly lifestyle. Buckets 1 and 4 house the remaining savings, flexibly balanced between near-term access and long-term growth.
Sounds simple, right? And that’s the temptation. If you present this as a “Four Minute Retirement Plan,” you’ll kill the conversation. Retirees aren’t just hesitant about annuities — they’re hesitant about products, pressure, and anything that feels pre-packaged.
Even the best-designed strategy needs the right planning process behind it. Here’s the blueprint we’ve found most effective.
The Process
Meeting 1: Introduction & Discovery
- Provide an overview of the Four Buckets — keep it high-level.
- Ask thoughtful questions: “What are you excited about in retirement? What keeps you up at night?”
- Start to identify gaps in their current approach — not to sell, but to build awareness.
- Gather just enough data to frame the next step.
- Answer lingering questions and earn permission to move forward.
This meeting is all about trust, curiosity, and connection — not conclusions.
Meeting 2: Emotional Discovery & Lifestyle Visioning
The client has been introduced to the Four Buckets, and they’ve started to see retirement in a new light. But this next step is crucial — it’s where trust deepens, and the real discovery begins.
Go beyond the surface:
- What do they truly want out of retirement?
- What are they afraid of — losing money, becoming a burden, outliving their savings?
- What does a great retirement feel like to them?
We gather all the relevant financial data, yes — but more importantly, we’re gathering emotional data. Most clients have never talked like this with a financial advisor before.
This is also where we start to model what their ideal retirement lifestyle could actually cost. It’s not just “what Social Security will cover.” Rather, it’s the version they’ve always hoped for — the travel, the hobbies, the generosity, the legacy.
When they start to realize what’s possible, they begin to see why additional sources of reliable income might matter.
This conversation isn’t about annuities yet, but it’s setting the stage. You’re establishing trust, building the emotional foundation that you’ll need when it’s time to introduce more sensitive parts of the plan, like guaranteed income solutions.
Meeting 3: Designing the Plan — Together
By now, you’ve gathered all the data. You’ve helped the client articulate a retirement vision — sometimes for the very first time. And now, it’s time to start crafting that vision together using the Four Buckets framework.
Walk through each bucket in order, from most familiar to least. This order matters because it builds confidence and clarity as you go. Revisit your previous meeting to reconfirm the different targets you’ve discussed already to reinforce the journey you’re on.
Once the plan is designed, take a moment to step back and review it together — just like meeting with a builder after the blueprints are finalized. Now it’s time to talk about how the plan gets built.
We are finally at the moment when the word annuity enters the conversation. But here’s what makes it different: You’ve spent three meetings laying the groundwork. You’ve helped the client clarify their goals, cast a vision, and understand the role each piece of their savings plays. You’ve already established the why behind an annuity. You’re not selling — you’re guiding.
Conclusion
Will every client enthusiastically agree to the plan? Not always. Even when annuities are embedded into a thoughtful, client-centered process like the Four Buckets, there may still be hesitation. There may be questions, concerns, or a slower timeline than you’d like.
If you’re an advisor who’s spent any time in this space, you should know not to expect a standing ovation when this topic comes up. But keep serving retirees with this as the focus: They’ll be better off with a little more lifetime income, and you can help them get there.
Ethan Lohr, CFP® is a partner with Lohr & Company and co-founder of The Four Buckets.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
