Steadfast Wealth Planning Podcast

Are You Saving Enough for Your Retirement?

• Cody Stansell • Episode 3

Share episode

How Do I Know If I’m On Track For Retirement?

Do you lose sleep wondering if your retirement savings will be enough? You're not alone. The most common concern we hear isn't about becoming wealthy—it's about avoiding becoming a burden on family in later years.

In this enlightening discussion, Senior Wealth Advisor Cody Stansell tackles the question that weighs heavily on so many minds: "How do I know if I'm on track for retirement?" Moving beyond simplistic online calculators and one-size-fits-all solutions, Cody reveals why retirement planning is deeply personal and comparable to individual calorie needs—what works for one person may be completely inadequate for another.

Discover the powerful concept of cash flow matching—identifying how much you'll need in retirement and aligning it with income sources. Cody explains how the 4-5% withdrawal rule works and why having your retirement "oxygen mask" secured before addressing other financial priorities creates a foundation for confidence. For younger listeners still decades from retirement, learn the value of the 15% savings guideline and how it provides direction amidst life's inevitable changes.

Whether retirement feels distant or drawing near, this episode delivers practical wisdom grounded in Christian values to help you build more than wealth—to build a life well-lived with purpose and peace of mind. Ready to gain clarity on your retirement journey? Visit steadfastwealthplanning.com for a complimentary consultation.

To learn more about Steadfast Wealth Planning visit:
https://www.SteadfastWealthPlanning.com
Steadfast Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Speaker 1:

Welcome to the Steadfast Wealth Planning Podcast, where faith and financial wisdom come together. Hosted by Cody Stansel, owner and senior wealth advisor, we provide comprehensive Christian-based financial planning to help families, individuals and business owners build a life they're proud to live. From investment management and tax planning to preparing for retirement, we're here to guide you with clarity, integrity and purpose. Let's get started.

Speaker 2:

Retirement planning isn't just about reaching a number. It's about ensuring you have financial confidence to enjoy your future with peace of mind. Welcome back everyone. I'm Sophia Yvette, co-host slash producer, back in the studio with Cody Stansel, Senior Wealth Advisor for Steadfast Wealth Planning. Cody, how's it going today?

Speaker 3:

Hey, sophia, I am doing well. How are you doing?

Speaker 2:

I'm also doing well, Cody.

Speaker 3:

Good, absolutely.

Speaker 2:

It's a question most of us think about from time to time. How do I know if I'm on track for retirement?

Speaker 3:

Yeah, great question. It's actually probably the most popular question that we receive from folks because it's definitely on everyone's top of mind. I don't think I've ever had a client say, cody, my goal is to be rich one day. But a lot of them do say I just don't want to be poor, right, I don't want to be a burden on my children financially down the road, and so that's a. It's a big topic for a lot of folks.

Speaker 3:

The first way is I would caution a lot of folks to from just googling. I would caution a lot of folks from just Googling this question and you get very generic answers, online calculators and some of those things. I know it was a million dollars worth enough or less more. It's kind of like calories in a day. Everyone's a little bit different. Right, the standard 2000 calories a day. But the real answer is well, are you tall, are you short, are you active, are you not? What's your family history? You know there's a lot that goes into it. So first thing I do is hesitate on Googling a question like this and trying to find. So I would obviously start meeting with a competent financial planner. I think it's a great first step to see if you're on track for retirement?

Speaker 3:

When you meet with our team, this is the first question we ask. I make the analogy of kind of like if you're on an airplane and the oxygen masks come down. They always tell you to put yours on before helping someone around you. Retirement that particular topic is that oxygen mask. For us, we want to make sure you're on track for retirement before we can move on to some of these other goals or other financial action items that you have of saving for your child's college or helping your parent with their financial journey, or life insurance or whatever the other topics are. Making sure we check that box. You know being on track for our own retirements the first thing that we want to secure. But to practically answer your question, it's all about matching cash flow and what I mean by that.

Speaker 3:

We sit down and go over how much you want to spend in retirement, so we talk through okay, what's your lifestyle like today? Is that kind of lifestyle that you want to live in retirement? Your basic living needs, healthcare costs, spoiling your grandchildren, travel, whatever it may be, whatever you want to do, what does that dollar amount need to be? And then we back into that number with any income that you have coming in. So what about social security? Do you have a pension, any kind of rental property income, part-time work, any other income that you have coming in? And then what's the deficit?

Speaker 3:

Right, if we need $10,000 a year and we have $5,000 coming in, where are we going to find that other $5,000? That's where we your bucket of money, your IRA, your 401k, your brokerage investment account. We use a standard of four to 5% withdrawal rule from that bucket of money. So an example if you have a million dollars invested, we can securely send you 40 to $50,000 per year to make up that difference, right? Especially for folks that maybe are in their 40s or early 50s and retirement still a decade plus and they don't really know what kind of lifestyle they're going to live down the road. That's how we can back into those numbers to know how much to save so that our bucket of money is big enough to provide this kind of income.

Speaker 3:

Right, and just like the calorie analogy that I used earlier, that 4% to 5% withdrawal rule is obviously a little bit different for every folk, right? If some people want to leave a legacy to their kids, well, they may need to withdraw a little bit less than that, so that their portfolio keeps growing. But I have a lot of folks that say you know, I've saved this money. I worked hard. This is for my spouse and I and, yes, if there's any leftover for my children, great, but if not, sorry, you know, then you could withdraw a little bit more because your existing balance isn't as much of a need. So it really really does depend.

Speaker 3:

But a big one too is we use software. I'm a visual learner, so even if someone just tells me something, it's less impactful than showing me something. So we use software on a screen that says you know, here you are today, here's where you want to get to. And then, okay, how do we get there? How much do we need to save? How much do we need to earn with our investments? How can we get there with those factors?

Speaker 3:

Then the next part is okay, if we're saving enough for retirement, all looks good. Then what could derail this retirement plan? What could go wrong? That makes us off track? Then we go through what if this happens? What if this happens? What if one of us gets sick? What if we end up needing to spend more than we originally thought? There's a lot of different scenarios that we have to go into at that time, right.

Speaker 3:

And then obviously, there's a tax factor. Cody, we're on track for retirement, we have enough, but what's the best way taxes wise to go about this? Which account do we need to withdraw from which? Should we be saving in a Roth 401k? Should we be saving in a traditional 401k? All those questions that we have.

Speaker 3:

So as you approach retirement, it gets much more concise on these details and these numbers. The younger you are 30s, 40s, early 50s I make this joke all the time. I know the Lord is looking down, chuckling that we're trying to forecast 20 years in the future, like any one of us know. You know, but financial planner planner is in my title, so we have to have a plan. But for those folks, if you're 40 years old and you just don't know if you're saving enough, we use the 15%. You know. Just save at least 15% of your income into an account. You know, even if you have 20, 30 years to go and life will definitely change on you. So save that amount. And as you approach retirement, we can get much more detailed with these details and numbers.

Speaker 2:

Wow. And one final question for you today, cody what are the tax implications of withdrawing from different retirement accounts?

Speaker 3:

tax implications of withdrawing from different retirement accounts? Yes, absolutely so. There are three buckets of money, if you will, that the IRS allows you to have. There's the traditional 401k and IRA right, you contributed money to that account type during your working years. It grows and grows. You take any of those distributions from that account. You'll just pay regular income tax on them, right? So if you take out $20,000 from a traditional IRA or a traditional 401k, we send you a 1099 tax document that you have to report that $20,000 of income.

Speaker 3:

And then there's the Roth account right? That's the second account type, kind of the opposite of the traditional IRA. You put money into a Roth 401k, a Roth IRA no tax benefit today during your working years, but that money grows and grows and grows tax-free and you can take it out in retirement tax-free. And then the third bucket that not a lot of people know about it's a really powerful tool is just a brokerage account, right? Bucket that not a lot of people know about it's a really powerful tool is just a brokerage account. It's not a retirement account, but it offers ultimate flexibility. You can touch it when you're 40, when you're 50, you don't have to wait until retirement like some of these other account types are, and it's just a capital gain tax consequence.

Speaker 3:

So an example you invest $100,000, it grows to $150,000. You say, oh, cody, sell all $150,000. I need that money. You just owe capital gains tax on that $50,000 of growth. In a perfect world, all of your money is in a Roth bucket, tax-free, forever. You never have to worry about Uncle Sam and the IRS. That's usually a little unrealistic for folks. So having some spread across those three buckets, so when you are retired and you need money from your portfolio, it really allows us to look at the tax code of what's the tax code this current year. Okay, let's send you this portion from your traditional IRA, let's send you this portion from the Roth IRA and we can really try to gain the tax code the best way we can.

Speaker 2:

Love it, Cody. Thank you so much for those helpful insights. Have a wonderful rest of your day and we'll catch you on the next episode.

Speaker 3:

You too, thanks, sophia.

Speaker 1:

Thanks for joining us on the Steadfast Wealth Planning Podcast. Ready to take the next step in your financial journey, visit steadfastwealthplanningcom for a complimentary consultation or call 469-606-2040. Smart planning, christian values, a life well lived. We'll see you next time.