Landing the Retirement Plane: How to Avoid Common Withdrawal Mistakes

What Are The Biggest Mistakes People Make When Withdrawing From Retirement Accounts?

How you withdraw from your retirement accounts is just as crucial as how much you save—possibly even more important. This fundamental truth sits at the heart of our latest conversation with Cody Stansell, who reveals why many retirees struggle despite substantial savings.

Drawing from years of experience guiding clients through retirement transitions, Cody explains that moving from accumulation to distribution represents a profound shift that many fail to navigate properly. "It's like taking off with a plane," he explains. "It's easier to take off and coast in the air than it is to actually land the plane." This aviation metaphor perfectly captures why even diligent savers can find themselves in trouble without proper withdrawal strategies.

The episode delves into the two most devastating retirement withdrawal mistakes. First, failing to create a comprehensive plan that accounts for market volatility, unexpected expenses, and inflation—which has driven the cost of living up 22% since 2021 alone. Second, maintaining inappropriate investment allocations that either expose retirees to excessive market risk or fail to generate the growth needed to sustain purchasing power over decades.

Cody's innovative three-bucket approach provides a practical framework anyone can implement. By strategically allocating funds based on when they'll be needed—immediate expenses, mid-term needs, and long-term growth—retirees can both sleep soundly during market turbulence and ensure their money lasts as long as they do. He also addresses the psychological aspects of retirement spending, noting how natural savers and spenders require different guidance to achieve financial balance.

Whether you're approaching retirement or already there, this episode delivers actionable insights to help ensure your nest egg provides the retirement lifestyle you've worked so hard to achieve. Ready to implement these strategies? Visit Steadfastwealthplanning.com for a complimentary consultation or call 469-606-2040 to speak with a qualified advisor who can help tailor these principles to your unique situation.

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

Episode Transcript

Speaker 1 (00:04):
Welcome to the Steadfast Wealth Planning
Podcast, where faith andfinancial wisdom come together.
Hosted by Cody Stansel, ownerand senior wealth advisor, we
provide comprehensiveChristian-based financial
planning to help families,individuals and business owners
build a life they're proud tolive.
From investment management andtax planning to preparing for

(00:25):
retirement, we're here to guideyou with clarity, integrity and
purpose.
Let's get started.

Speaker 3 (00:37):
It's not just about how much you save for retirement
, it's about how you take it out.
Let's break down the mostcommon withdrawal mistakes and
how to avoid them.
Welcome back everyone.
I'm Sofia Yvette, co-host slashproducer.
Back in the studio with CodyStansel, senior wealth advisor
for Steadfast Wealth Planning.
Cody, how's it going today?

Speaker 2 (00:59):
Sofia doing well.
How are you doing?

Speaker 3 (01:03):
I'm also doing well, cody, and that is great to hear.
Can you inform our listenerswhat are the biggest mistakes
people make when withdrawingfrom retirement accounts?

Speaker 2 (01:15):
Yeah, good question.
This is a big one for youroverall financial plan.
Kind of like you said in theintro, you could save millions
of dollars.
You could have $10 millionsaved.
But if you're spending too muchquote unquote in retirement,
it's still going to run out,right?
So it's not just accumulatingthose dollars, it's how you
spend it in retirement too.

(01:36):
A lot of folks can accumulatemoney between 30 and 60, right,
for three decades adding to your401k.
Being aggressive with yourinvestments, you're not too
worried about the stock marketfluctuations because you know
you have years, or even decades,until you retire.
So it's a different animal.
It's a different ballgame whensomeone is ready to retire,

(01:58):
compared to when they're intheir accumulation years.
Like I said, between 30 and 60,.
Let's say, if you don't know ifyou're going to run out, that's
very nerve wracking for a lotof folks, right?
So, and usually what I see isnatural spenders.
You know people that like tospend money in their working
career.
They're kind of naturalspenders in retirement too,

(02:20):
right?
So our job is a lot of it's,you know, reining them in in
retirement.
You know I use it this way, msJones.
Make sure that 85 year old MsJones still has money, you know,
compared to current day 65 yearold Ms Jones.
But then there's some otherfolks that are natural savers
during their working career andso naturally we see them be

(02:41):
natural savers too.
They don't spend too much money, and for my job that's actually
fantastic, because that's thefun part, right?
I get to encourage people likeno, no, no, you're okay, you can
spend some more money inretirement, right?
Because they're just so scaredto spend any money.
So it's not about accumulatingzeros at the end of your
financial plan, right.

(03:02):
There's no reward for havingthe most amount of money in your
IRA or 401k, right?
It's about living the life thatyou want to live in retirement,
passing on a legacy, being afulfilled retirement for your
kids, grandkids, and sobalancing spending enough and
not too much is a big deal.
But to answer your question, thetwo biggest mistakes we see a
lot of people make are one isjust not having a plan, right.

(03:26):
A lot of folks just go intoretirement.
Like I was saying, accumulatingassets in your working career
is a lot easier than OK.
You know, it's kind of liketaking taking off with a plane.
It's easier to take off andcoast in the air than it is to
actually land the plane, takeoff and coast in the air than it
is to actually land the plane,right?
So what if your investmentbalance goes down 10 to 20%

(03:49):
because of the market?
What if retirement costs youmore than you thought it would?
Inflation has been a big onethe last few years, right?
A recent study came out thiscost of living is about 22% more
than it was in 2021.
So 22%, that's a big deal,right?
In just that four-year timeperiod.
So what if you spend more thanyou originally thought you would

(04:11):
Not?
Having a plan is a big one.
We have software that runsthrough a thousand different
scenarios and it's real thousandscenarios I'm not being
hyperbolic Of different marketevents, inflation what if tax
law is different?
All the what ifs that you and Ican't control.
And it runs through all of yourincome from social security,

(04:33):
any pension, any rental income,if you have part-time employment
during your first few years ofretirement.
So all of that income that youhave coming in compared to all
of your expenses, right, howmuch do you want to spend in
retirement?
And the software isn'temotional, it's just data.
So if the data looks good andhey, we have a good plan, you

(04:53):
can spend this much.
You know, no matter what marketevent we have, then great.
If the data doesn't look goodand the plan doesn't look good,
then it's back to the drawingboard.
What can we do?
Do we need to save more?
Do we need to spend less?
You know, make some changes tothe financial plan.
So once again, the first big oneis not even having a plan.
A lot of people just don't know.
Another big mistake we seepeople make is with their

(05:15):
investments in retirement.
I see way too many folksinvested too aggressively,
especially in their first fewyears of retirement, because
they don't know any different.
They've had stock market mutualfunds for decades in their 401k
and that's the only thing theyknow.
And the first stock marketpullback, you see, when you're
retired, it scares a lot offolks, right.

(05:36):
So I just had a lady in here.
She retired last year.
As of this taping, it's May of2025.
The market is down to start theyear.
This is her first experiencethat she is retired and the
market has pulled back.
In previous years she hasn'treally cared as much because
once again she's in theaccumulation phase.
But it hits you differentlyemotionally when the market

(05:59):
pulls back and you're not addingmoney to your 401k anymore.
We're sending you money fromyour portfolio, so emotionally,
it affects a lot of folksdifferent.
Some folks can panic and selleverything when the market is
low because they don't want tolose their nest egg, and I
understand, rightfully so.
But this in general isinvestment suicide, right,
that's what we call it sellinglow, and then when the stock

(06:21):
market comes back up andeverything looks good, okay, let
me buy back in.
Well, you're just buying inhigh and then the market pulls
back again.
So you get scared and sell lowagain and it's a vicious cycle,
right?
And so we have a bucketingapproach.
So think of three differentbucket approach.
The first bucket we want you tohave about 24 to 36 months of

(06:43):
income in a very, veryconservative investments, right?
So if you want to spend $5,000a month, you need $5,000 a month
in your portfolio.
That math we went about.
I have $120,000 to $180,000 ofvery conservative money, right?
Doesn't really fluctuate withthe market, you're not worried
about it.
That is the money that we'resending you in retirement and

(07:06):
that way you can sleep easy atnight that, no matter what
happens in the market, you'restill going to get a paycheck.
The second bucket is another 24to 36 months of income, but it's
invested a little bit moreaggressively.
It's modestly conservative,modestly aggressive, right, a
little bit more aggressive, butstill not near as volatile as
the stock market.
This we want to keep up withinflation.

(07:27):
We want to make sure that moneyis still there as well.
Then the remaining balance ofyour account we want for growth,
right, and this is not for youtoday, this is for you in 5, 10,
20 years from now.
It needs to keep up withinflation.
When you hire me as your advisor, I have as just as much duty as
current day client as I do 20years from now, current client.

(07:49):
So we can't be uberconservative with all our
investments, not keep up withinflation, not keep up with your
withdrawals and retirement, andyou look up 10, 20 years from
now and you don't have enoughfor your latter years, right, we
can't do that.
This portion of your money willgo up, it will go down, it's
gonna do what it's going to do,but obviously over time, over

(08:11):
those long periods of time, it'sgoing to grow with that
compound interest effect.
So it's kind of like the valueof your house If you have no
plan on selling it in the nextdecade.
You care much less what thevalue is month to month, year to
year, right, because you haveno plan on selling it today.
You don't really care.
It's going to do what it'sgoing to do.

(08:31):
That same analogy with thegrowth portion of your
investments.
So biggest mistakes we seepeople have is they don't really
have their investment moneythought out like that.
They just have it in one bigbucket and some of it's
conservative or some of it'saggressive, but they don't
really understand why and itjust feels like one big bucket
that's going up and down withthe market.
We don't like that type ofstyle.

(08:53):
We like having your differentinvestments spread out for that
particular reason, and onebucket is for today, one
bucket's for a few years fromnow and another bucket is for a
decade from now.
So those are the two biggestmistakes we see just not having
a plan and then your investmentallocation not being really what
you think it is, especiallyyour first few years of

(09:13):
retirement wow.

Speaker 3 (09:16):
Well, thank you so much, cody, for those helpful
insights, and we'll catch you onthe next episode.
Have a fantastic rest of yourday absolutely you too, soph.

Speaker 2 (09:25):
God bless you.

Speaker 1 (09:30):
Thanks for joining us on the Steadfast Wealth
Planning Podcast.
Ready to take the next step inyour financial journey, visit
steadfastwealthplanningcom for acomplimentary consultation or
call 469-606-2040.
Smart planning, christianvalues, a Life Well Lived.
We'll see you next time.