Mastering the Three-Legged Stool: Building Retirement Income That Lasts

How Do I Create A Retirement Income Plan That Lasts?

Retirement planning goes far beyond simply saving money—it requires a strategic approach to creating sustainable income that lasts throughout your golden years. In this enlightening episode, Senior Wealth Advisor Cody Stansell breaks down the essential components of building retirement income that withstands the test of time.

At the heart of effective retirement planning is understanding your own investment personality. Are you the conservative type who values predictable income and minimal market fluctuations? Or do you have a more aggressive mindset, comfortable with market volatility in exchange for potentially higher returns? Cody emphasizes that neither approach is inherently right or wrong—what matters is creating a strategy aligned with your personal comfort level and needs.

The conversation explores the classic "three-legged stool" approach to retirement income. First, Cody offers powerful insights on Social Security timing, revealing how delaying benefits can increase your monthly payments by approximately 8% for each year you wait. Second, he discusses the pros and cons of annuities and pensions as guaranteed income sources, highlighting when they might (or might not) be appropriate for your situation. Finally, he examines how to strategically withdraw from investment portfolios to complement your other income streams.

Perhaps most compelling is Cody's breakdown of "bucket planning"—a methodology that divides retirement savings into three distinct timeframes: a conservative bucket for immediate needs (24-36 months of expenses), an intermediate bucket for the medium term, and a growth-focused bucket for long-term needs. This approach allows retirees to sleep peacefully during market downturns while still positioning a portion of their assets for the growth needed to combat inflation over decades of retirement.

Want to create a retirement income plan tailored to your unique situation? Visit Steadfastwealthplanning.com for a complimentary consultation or call 469-606-2040. Smart planning, Christian values, a life well lived.

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 2 (00:37):
Saving for retirement is only half the journey.
Building a plan to make moneythat lasts is where the real
strategy begins.
Here's how we help clientscreate lasting income.
Welcome back everyone.
I'm Sophia Yvette, co-hostslash producer.
Back in the studio with CodyStansel, senior Wealth Advisor
for Steadfast Wealth Planning.

(00:58):
Cody, how's it going?

Speaker 3 (01:00):
today.
Hey, sophia, I'm doing well.
It's springtime, sun's out.
I'm actually going to a TexasRangers game this evening, so
life is good right now.

Speaker 2 (01:09):
I appreciate you asking oh, lots of fun, yes
absolutely so for our listenerswho may not know, how do I
create a retirement income planthat lasts?

Speaker 3 (01:22):
great question.
It's all about knowing yourselfand your personality type
around investments and income,and what I mean is there are
some folks that are moreconservative and want a fixed
income stream and don't want asmuch market fluctuations with
their investments and with theirretirement nest egg and
rightfully so, there's nothingwrong with that Whereas other

(01:43):
folks are slightly moreaggressive.
They understand the market,they're okay with their balance
going up and down and they don'twant to lock themselves into
just a fixed income stream inretirement, and so there's no
right or wrong answer.
It's just knowing whatpersonality type you are, and
what makes sense for someclients may not make sense for
other clients.
So we run through an exercisewhere we have this conversation

(02:08):
with clients and kind of gaugewhere their personality type is,
but we want to create an incomeplan.
We have software aggregatingall of your income sources.
So in general there's aboutthree different sources of
income.
You'll hear a lot of folks callthis the three-legged stool in
our industry.
One is Social Security.
So having a plan around when totake social security is really
crucial.
You can take it as early as 62,or you can delay it as late as

(02:31):
70.
But for every year you delay.
It's about an 8% increase inyour monthly income, right?
So if you're entitled to $1,000a month at age 65, but if you
wait to take it at 66, one yearlater you'll receive about a
thousand eighty dollars a monthapproximately.
Right, the mass on exact, butit's around there.
I know this doesn't sound likemuch 80 bucks more a month, but

(02:54):
that's every month for the restof your life, right?
And that's just delaying it oneyear.
So you can imagine if yourbenefits even higher if you
delay it two or three years andyou live another 30 years.
That does add up significantlyover time.
Our opinion on Social Securityis don't take it until you
really need the cash.
Don't just turn 62, you'restill working or maybe you just

(03:17):
retired but you don't reallyneed the income, and then you
just turn on Social Security andthat money just goes into your
savings account.
It's taxed, it's taxable incometo you, right?
So don't just turn it on justfor the sake of turning it on.
It's when you need that income.
Then let's obviously considerturning it on.
So it's having a plan andhaving a strategy before social

(03:37):
security.
The second leg of thatthree-legged stool is an annuity
or a pension, kind of like whatI was talking to earlier.
Three-legged stool is anannuity or a pension, kind of
like what I was talking toearlier.
Some folks don't like marketvolatility, so purchasing an
annuity may make sense for them,doesn't make sense for everyone
and you definitely have to knowwhat you're purchasing before
pulling that trigger, becausethere's generally no going back

(03:58):
once you purchase an annuityafter a certain period of time.
But basically an annuity ispurchasing with a lump sum of
your balance, purchasing amonthly income stream to pay you
every month for the rest ofyour life.
So generally there's no marketfluctuations, but there is a.
You know, with $300,000 of mymoney, I can purchase $2,000 a

(04:19):
month for the rest of my life.
For some folks that soundsgreat, for some folks, oh, you
know, I kind of feel handcuffed.
I can't take more than twogrand, but I can't take less
than two grand, you know.
So it's really.
Once again, this depends onsomebody's personality whether
that makes sense for them or not.
And then the last stool, thethird stool, is your investment

(04:42):
portfolio, your 401k.
This is where lining up all ofyour income streams, adding them
together, seeing how much youwant to spend in retirement
versus how much withdrawals youneed from your bucket of money,
we'll have a fulfillmentretirement and that's really
what we gauge with our softwareright, lining up your income
expenses and how much of yourretirement bucket do we need
withdrawal from.
So having an income plan thatlasts is all about knowing your
options, knowing how much ofyour retirement bucket do we
need withdrawal from.
So having an income plan thatlasts is all about knowing your

(05:03):
options, knowing how much youwant to spend all of your other
sources of income and decidingif you want to fill that income
gap with normal withdrawals fromyour retirement portfolio or
purchasing an annuity with anincome stream makes sense for
you.

Speaker 2 (05:19):
So, cody, what is bucket planning and how does it
protect your retirement income?

Speaker 3 (05:25):
Yeah, absolutely so.
Bucket planning is most folksjust think of their money as one
bucket of money.
Right, I have a 401k.
It's a million bucks.
Okay, that's one big bucket andsome of it's aggressive, some
of it's conservative, but youdon't really know and it doesn't
really all make sense.
And so when the market goes up,market goes down, your emotions

(05:46):
are really tied to that onebuck in money.
What we want to do is dividethat bigger bucket into three
different buckets.
The first bucket we want you tohave is about 24 to 36 months
of income in a very conservativeportfolio.
Doesn't really go up with themarket, doesn't really go down
for the market.
That is what we're sending youevery month and we know exactly

(06:08):
what it's going to be.
That way you're not lying awakein bed at night when the market
goes down wondering if you'llbe able to afford the next
monthly payment that we send you.
So that's the first bucket, avery conservative bucket.
And then we have anintermediate bucket.
That's another about 24 to 36months of income.
Which real math if you need$5,000 a month from your

(06:31):
portfolio, 24 months is 120grand, 36 months is about 180
grand.
So we want you to have about120 to $180,000 in that
intermediate bucket.
It's invested a little bit moreaggressively than the
conservative bucket, but not allstock market exposure.
It's not fluctuating that muchand that way we can touch it if

(06:51):
we need to, but it's reallygoing to keep up with inflation
a lot more.
And then that last bucket isyour growth bucket, and it's not
for today.
It's for 5, 10, 20 years fromnow.
Where we need to make money, weneed to keep up with inflation.
It's going to go up, it's goingto go down, it's going to go up
, it's going to do that thing.
But once again, it's not foryou today.

(07:12):
It's for 2035, ms Smith.
It's not for 2025, ms Smith,miss Smith, it's not for 2025,
miss Smith.
So I made this analogy earlier.
But it's kind of like you havea house and you don't plan to
sell that house within the nextdecade.
You care much less what yourhouse is worth.
Month to month you don't reallycare.
So it's kind of that mentality.
It lets you sleep at night,while also keeping up with

(07:33):
inflation and making sure that20 years from now you'll still
have these buckets of money foryou.

Speaker 2 (07:40):
Amazing.
And so one final question foryou today, cody how do you
protect your retirement incomeagainst inflation?

Speaker 3 (07:49):
Yeah, great question.
Inflation, as we all know, isjust the cost of goods going up,
and we've seen that drasticallyin the last four or five years,
right since COVID.
The biggest thing a lot offolks.
It's counterintuitive ifinflation on average is about
two and a half percent per year.
That's what history tells us.
The last 80 years or so.

(08:10):
Once again, the last four years, it's been much more than that.
Recent studies come out.
Just cost of living is 22percent more than what it was in
2021.
Just bread, eggs, gasoline,housing, whatever.
It may be Right, so I know it'sbeen a lot more here recently,
but that's where, if you justhad your money too

(08:31):
conservatively invested let'ssay you have it in your bank
account at 3% in a high yieldsavings account Well, once again
, inflation on average is about2.5% per year.
So after you even pay taxes onthat 3% from your bank, you're
not really getting anywhere,right?
You're not making money.

(08:52):
You're just barely keeping upwith next year's cost of bread
and eggs.
And so the best way to combatinflation is actually stock
market exposure, because what isinflation?
Inflation is actually stockmarket exposure Because what is
inflation?
It's Apple coming up with theirnew iPhone and they charge $200
more than last iPhone.
Right, that's cost of livinggoing up, and so it's.

(09:15):
But when you own stocks andyour actual shareholder of Apple
, you know they charge more,which causes inflation, but once
again you as a shareholder, thestock price goes up.
So actually owning stock marketexposure is the best way to
combat inflation.
If companies raise their prices, they're making more and

(09:35):
therefore if you own thatcompany's stock, you're making
more as well, so that's the bestway to combat inflation.

Speaker 2 (09:42):
Love it, Cody.
We'll catch you on the nextepisode.
Have a fantastic rest of yourday.

Speaker 3 (09:47):
You too.

Speaker 1 (09:52):
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.