This ‘fruit pyramid’ can help you build the pension that suits you

Over the years, I’ve had thousands of meetings with people about their impending retirement. I have listened to their hopes and dreams, alongside their worries and concerns, about one of the greatest transitions they will face. And I noticed something: Of all the subjects and life skills we learned in school, retirement was never one of them.

This inspired me to design a simple model to help people understand their retirement options for a healthy tax future. It’s all about fruits.

Remember the government food pyramid? That’s the nutritional model we learned in elementary school to guide us in healthy eating habits. Grains are at the bottom of the pyramid and require the greatest number of servings, followed by fruits and vegetables, then dairy, meat, and poultry, and at the very top are sweets and fatty foods, which require the fewest number of servings.

The food pyramid adapted to your pension

There is a reason this model worked and is still remembered today. Most of us are visual learners. That’s why I adapted the food pyramid for a “fertile retirement,” where people are considered apples, pears, or strawberries when it comes to retirement.

Each piece of fruit represents a type of retirement situation with an associated strategy to mitigate the inherent risks. Once you know what fruit you are, you can adjust your plan to suit your situation.

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Rather than focusing on collecting money for possessions, this process focuses on creating the kind of life you want to live after your employment.

Needs, wishes and inheritance

Imagine a pyramid that is a retirement triangle. Like the food pyramid, it is divided into three sections. But here are the expenses sections: needs, wants, and inheritance.

The base of this pyramid is the foundation that represents our needs – the items necessary for our existence, such as food, shelter, utilities and health care.

The center represents our desires – items that satisfy our human desire to entertain, have fun, travel, explore, and connect with others through hobbies, sports, or art. When calculating your needs, consider your expenses during a non-pandemic scenario.

The top small triangle of our pyramid represents our heritage. It is what we intend to pass on to our family, house of worship, charity, or some other cause while we are alive or after we die.

Read: Here’s the Average Retirement Savings by Age: Is It Enough?

Once you understand this retirement triangle, you can easily determine what your “fruit” is associated with it.

Pears are widest at the bottom (Needs), Apples widest in the middle (Wants) and Strawberries are widest at the top (Legacy). Your fruit is determined by the area of ​​the retirement triangle where your income stream falls short.


If your sources of income such as Social Security and any pensions or retirement savings do not cover your needs, you are a peer as your income deficit is at the lowest level of the pyramid.

Pears should focus on providing guaranteed sources of income to cover necessary expenses. Annuities from insurance companies can be a way of guaranteeing income, either for life or for a predetermined number of years. It is helpful to work with a financial professional when choosing one.

Pears may also consider working longer hours, either full-time or part-time, to increase their Social Security income, which is based on their earnings. This will also add more time to save money and mean fewer years to take out your retirement savings.

Pears should seriously consider analyzing their planned retirement date and expenses in relation to the long-term sustainability of their plan.

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The biggest risks to Pears, other than cash flow, are health care spending and the rising cost of living in general, as most guaranteed income payments other than Social Security don’t keep pace with inflation.


If your sources of income cover your needs but not your wants, you are an Apple, as your income shortfall is in the middle of the retirement pyramid.

Apples are where most retirees fit. They have to make many decisions, such as how to allocate their portfolio to balance their risk comfort zone while generating an income stream to keep up with the rising cost of living.

Apples might consider implementing a dividend portfolio strategy that generates enough investment income to cover their needs. This strategy focuses on owning stocks of companies with a solid history of dividend payments and persistent expectations of them.

However, many portfolios will not be large enough to support a dividend-only approach. Then a total return strategy that divides principal and income would be more appropriate.

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The investment approach for a total return portfolio would focus on a balance between stocks and bonds. The most common total return technique used by financial planners today is the bucket approach, where each bucket focuses on the time until the money is needed.

For example, Bucket No. 1 would be for the first two years and held in basic savings, money market accounts or funds, bank CDs, or short-term treasuries.

Bucket #2 would be three to seven years into retirement, with investments similar to the total return strategy above, but with less equity exposure.

Bucket No. 3 would be for years eight and beyond and should only contain stock.

The biggest risk for Apples is fear-driven financial decisions by avoiding huge investment losses that go into early retirement and by failing to properly prepare for health care costs.


If your sources of income cover both your needs and your desires, you are a strawberry. In this case, your income may or may not cover all of your Legacy items.

However, strawberries have the ultimate financial flexibility because their needs and wants are safe. They can prioritize leaving an inheritance through tax-savvy vehicles like Roth IRAs, life insurance, charitable contributions, and charities. These vehicles can be very beneficial for families looking to maximize the after-tax estate value left to their heirs or a third party, while in some cases receiving tax benefits today.

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The biggest risks to Strawberries are taxes and leaving money with no plan to distribute it. That’s why it can be helpful to have a team of financial professionals.

I hope my “fertile retirement” model will help prevent retirement from feeling overwhelming to you. In any case, it should be the most rewarding phase of your life.

This article is adapted from “The fruitful retirement: a financial framework for the biggest chapter of your lifeby Jim DeGaetano.

Jim DeGaetano, CPA, CFP® is the author of “The Fruitful Retirement”, founder of Diamond Wealth Advisors and author of “Larry the rabbit saves his money— a children’s book that teaches children aged 8 and under about money and saving.

This article is reprinted with permission from© 2021 Twin Cities Public Television, Inc. All rights reserved.

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