By David Caviness, CFP® – because money should propel you, never restrain you.
The Accumulation Trap
Ever feel cash‑strapped even though your net worth screams “millionaire”?
- You spot a can’t‑miss investment or dream vacation—but the cash isn’t there.
- Required Minimum Distributions ambush you with a tax bill bigger than your first salary.
- Every swipe of the card triggers guilt because the bulk of your money feels bolted inside retirement accounts.
These challenges all trace back to one habit: overloading the retirement bucket while starving the ones that fuel day‑to‑day freedom.
I see investors so focused on the retirement piece, that they’re not filling their buckets up correctly between taxable and non‑taxable money.
That imbalance shows up later as:
- Liquidity traps when opportunity knocks
- Tax surprises once the RMD train leaves the station
- Guilt about spending because all the money feels “locked away”
But all this does is strap you for cash and can make “actually living” terribly difficult. Let’s see why diversifying your savings can buy you some breathing room now and in the future.
Bucket Math 101
Think of your wealth in three simple containers:
| Bucket | When You Use It | Tax Reality |
| Tax‑Deferred (401(k), Traditional IRA) | Retirement | Taxed later—often at higher brackets if you’re successful |
| Tax‑Free (Roth, HSA) | Retirement flex | Grows & exits tax‑free, but limits apply |
| Taxable (Brokerage, Cash) | Today & tomorrow | Already taxed—liquid and penalty‑free |
Good planning isn’t about maxing one bucket—it’s about filling all three in the right proportions so you can live, give, and pivot without friction.
- Too much in the tax‑deferred bucket? Future Required Minimum Distributions can shove you into a higher bracket just as healthcare costs spike, triggering a double‑whammy of bigger tax bills and higher Medicare premiums.
- Too much in the tax‑free bucket? Sounds dreamy, but over‑favoring Roth means you skipped current‑year deductions that could have freed up cash‑flow for goals like college funding or that once‑in‑a‑lifetime trip.
- Too much in the taxable bucket? You’re paying annual taxes you could have legally deferred, plus your money may sit in low‑yield cash because you’re afraid to invest what you “might need soon.”
Balanced buckets let you tap what you need today, reap smart deductions along the way, and still arrive at retirement with a flexible, tax‑efficient war chest.
Case Snapshot: The New‑Partner Crunch & How We Made Money Work for Him*
When a client of mine made partner at his law firm, we knew this was a huge win financially, but he would be faced with a crushing schedule and even more stress about the complexity of his wealth. Cash flow ballooned, but so did “mental taxation.” Because he was maxing out his tax-deferred savings, he never felt like he could enjoy what he was working so hard for. So what did we do? We re‑directed part of his 401(k) overfunding into a brokerage account and back‑door Roth strategy. Having more liquidity provided greater flexibility during a demanding period at work—allowing him to stay focused on both present responsibilities and long-term goals.
See It All in One View
DIY investors tend to stare at accounts in silos: Fidelity here, Vanguard there, HSA in a third place. Most often, the relief comes when everything sits on one dashboard, showing where you are, where you’re headed, and the exact path between.“Once you see that come together… guessing turns into ‘I know I’m OK.’”
How to Re‑Balance Your Buckets
- Map current flows – Know exactly how much pours into each container.
- Project future taxes – A CPA‑backed model shows where later RMDs or capital gains could bite.
- Redirect surplus – Shift dollars until the plan funds short‑term flexibility and long‑term security.
- Automate + review annually – Life moves; so should contributions.
A Final Word
If your spreadsheets scream “save more” while your heart whispers “live a little,” it’s time for bucket balance. Hand it off. Let’s build a plan that buys you bandwidth today and confidence tomorrow.
Ready to see every dollar in its best place?Schedule a Consultation → and free your Saturday mornings for living—not spreadsheeting.
*This is a hypothetical situation based on real life examples. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Caviness Wealth Management and LPL Financial do not provide legal or tax advice. Please consult with your tax or legal advisor regarding your personal situation.