In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss how to approach retirement income planning with confidence so you can retire comfortably and secure your retirement. With people living longer, dealing with market volatility, navigating retirement income and taxes, and planning around retirement and inflation, creating a strategy that works for decades is more essential than ever. They break down how to create retirement income that can last 30–40+ years while maintaining peace of mind in retirement.

Listen in to learn about the simple yet powerful Retirement Bucket Strategy—cash, income safety, and growth—and how each piece works together to help you plan for retirement at 50, retirement planning at 55, or retirement planning at 60. You’ll also learn how different tax buckets (pre-tax, taxable, and tax-free) impact your retirement withdrawal strategy and long-term retirement planning strategies so you can build an income in retirement that keeps up with life, goals, and inflation.

In this episode, find out:

• How to structure your money using the Retirement Bucket Strategy to create retirement income that lasts.
• Why market volatility, taxes, inflation, and longevity must be factored into every retirement income plan.
• The difference between pre-tax, taxable, and tax-free retirement buckets—and how each impacts your long-term plan for retirement.
• How fixed index annuities, cash reserves, and growth investments can work together within a retirement income planning framework.
• A real-life scenario showing how to build a retirement withdrawal strategy across multiple buckets for long-term stability.

Tweetable Quotes:

“When you structure your retirement income the right way, you remove anxiety and gain true peace of mind in retirement.” — Radon Stancil

“Diversifying across investment buckets and tax buckets is what makes a retirement income plan strong, flexible, and built to last.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome, everyone, to secure your retirement podcast. We are really excited to have a

conversation with you today on a topic that is near and dear to our heart. And the

reason why is because it’s something that we talk about all the time. It is

something that individuals that are looking at working with a firm like ours as well

as our current clients are always concerned and thinking about, and that is having

an income that will last as long as they do in retirement. And you think about it,

the reason why I think this is so important as we kind of build this up is that

you work for decades, and you have income coming in, either from a job or for an

employer. And then one day you decide I’m going to retire and you go, well, where

am I going to take my money from? And then I’ve got all kinds of things I got to

think about. How should my money be positioned? Do I need to worry about stock

market volatility? These things are just things that give us a lot of anxiety. And

I’ll be very honest with you. It doesn’t matter if you’ve got $500 ,000 or $10

million. The concern is the same. How do I build an income plan that will give me

the income I need, keep up with inflation, be able to deal with the market

volatility, and these are just things we’ve got to think about. So, I wanted to get

us started there, Murs. I guess, may, can you just talk a little bit more about

this idea and the framing of the concern? Yeah, so the big concern is you hit the

nail on the head, which is I just want to know that my money will last, right? So

many times, in meetings will hear people say something along the lines of I’ve got

what I’ve got at this point or maybe I’ve got a couple years left of savings but

for the most part I’ve got what I’ve got, and I need to know how we’re going to

make it last. And there’s a lot of potential headwinds that could come our way when

it comes to developing an income strategy. That’s why it’s so important to really

think through all the different pieces that we’re going to talk about today. But

some of those are the most common one is the markets. The markets are ever

volatile,

that bucket of money for because every dollar you take out from that while that

money is falling because the market is falling is a dollar that’s not in there to

recover if the market does recover and that that’s pretty important so the market’s

having an income strategy that’s going to be able to withstand market volatility is

really important another one equally important i would say is taxation a lot of us

have built up dollars in 401ks or pre -tax assets and hey I’ve got a million dollar

401k well the reality is it’s not all your million dollars is a portion of that

that’s promised to the government and so we have to take that into account and then

fast forward into your later years that if we overlook this this could be a tax

headwind or an income planning headwind as well which is the required minimum

distributions and then in between making sure we’re getting the taxation done properly

and not making mistakes there. Inflation is another big one. So, I want to know that

my money will last, but I also want to know that my money will continue to keep

up with the cost of living and I want to enjoy my retirement. I don’t want to

continue to have to make sacrifices. So how do I keep up with inflation? Inflation

is a big story right now. We’ve had to deal with it for the last five years.

We’re continuing to deal with it. So how can I develop a strategy to keep up with

it? And then the other is all around longevity. People are living longer and longer.

And, you know, whereas before you only had to plan for, you know, living to 75 and

that’s a really good retirement. And then 80. And now people are living easily into

their late 90s into their hundreds. And so, it’s a much longer time period,

especially if you retire at 60 or 65 and you look to 100. Well, that’s 40 to 35

years of income that you have to be able to generate. And is that possible? And

how do we structure that? So that’s why I think, you know, when it comes to a lot

of these responses or a lot of these issues are really covered with a, what we

would call simple, simple because we want to illustrate it, simple. There’s a lot

that goes on in it, but the concept is simple, which is something we’ve talked

about before on this podcast, those three buckets and that bucket strategy. So,

Radon, you want to take us into that? Yeah, so the three bucket is, you know, a

lot of times people ask, what should be my investment strategy. And a part of this

is the investment strategy, but really how do I structure my money to take away

anxiety? A lot of this is around how do I have peace of mind in retirement? How

do I have peace of mind that I know where my money is going to come from and

that I don’t have these worries? Well, if I set my money up into three buckets,

bucket number one is my cash bucket. Bucket number two, we call our income safety

bucket. And then bucket number three is our growth bucket. Now, how much money

should go into each of these buckets? That really depends upon the overall structure.

But we believe everybody should have some money in each of the three buckets,

regardless of the amount of money that you have. They should have these allocations.

So, let’s just talk about those buckets for just a couple of minutes. Number one,

our cash bucket. Now, there is an old saying that people kind of go with and

throughout their working years, they think that you should have six to 12 months of

cash of your income needs in the cash bucket. Really where that comes from is when

I was working for an employer, if I were to lose my job, I need to have six to

12 months in the bank so that I could have time to find a new job. That’s kind

of where that came from. Most of our clients. So, when you’re in retirement or real

close to retirement, my job, if I lost my job or I quit my job, I don’t need to

replace the income because I’m going to have income structured from my investments in

 and my Social Security. And if I’ve got a pension, I’m going to have it coming

from there. So, we leave it this way. Cash bucket, very, very personal,

meaning I’ve got some clients that want to have $30 ,000 to $50 ,000 in their cash

bucket. And I’ve got some clients that want two to $500 ,000 in the cash bucket.

Now, if you were to ask my opinion, I would tell you that’s probably too much. But

that don’t matter. It’s up to you. It’s what makes you feel good. So, if you really

want to hold that much cash, hold that much cash. That’s okay. The next bucket,

though, is the one, the next two buckets, rather, is really crucial to saying what

should be divvied up. Now today on this particular episode, we’re not going to go down

to what the allocation should be. We’re teaching you the concept. So, our next bucket

is our income safety bucket. So Merce, I’m going to let you handle the income safety

bucket and then I’ll talk about the growth bucket. Yeah, the income safety bucket is

very much, the goal of it or the purpose behind it is to provide stability with

our money. And we can talk about how much goes into each one of these categories,

but the dollars in this bucket, we want to be stable. We want that to be able to

earn a decent rate of return. We would call that in the realm of bond -like or

better. So today, I think it’s very feasible for this bucket to be earning in that,

say, four to eight percent average rate of return over to say the next 10 years.

interest rates are elevated right now. And so, there’s some advantages here in

particular in this bucket. But the key is that stable, it’s going to make a decent

rate of return. And then the biggest part of this, which goes back to stability, is

it’s got guarantees of no loss. Well, why is that so important? Well, if the stock

market has issues and all of our money is in the stock market, and we go to a

2008 or even a 2020 or a 2022 here recently, if all of our money is in there,

and we experience a 20 % slide in the markets, well, we’re exposed pretty

significantly. And we’re no longer putting money into this plan as much.

And so, we don’t have the ability to recover as quick, especially if we’re

withdrawing on that money. So, stability and not correlated to what the stock market

is doing is going to be rather, rather important. What we are typically seeing that

fits this bucket rather well is going to be in the space of the fixed index

annuity that’s done through insurance companies and provides exactly what I said

guarantees of no loss or principal protection. We get access to our money as well.

So that’s going to kind of cover what Rayden was saying of needing to have some

element of our essential needs covered and maybe some of our once in retirement all

covered this bucket or that the Fixed annuity provides that ability and a decent

rate of return, especially given where rates are right now, without the risk of the

stock market, without the risk of even the bond market. The bond market has had

some issues over the last five years and has had some volatility just like the

stock market itself. Other things that can work in this bucket are going to be in

that safe money type of category of CDs and what banks can offer. We just know

rates are declining right now. And so, the CDs that you bought two or two or three

years ago, are not going to be as attractive as they come due here in 2025 and

going into 2026. Bonds are also an opportunity in this bucket, although you’re adding

an element of risk to to this bucket if we are introducing bonds into the

portfolio. We try to keep this bucket, again, not correlated to the stock market and

this idea of guarantees and principles protection. So, bonds don’t always provide that.

And so those are really the major categories of what’s going to fill up this safety

bucket. And so bottom line is not non -correlation to the stock market,

stability, predictability, so that when we get into retirement and we need to start

drawing on our money to supplement our Social Security or supplement our pensions,

this will be the first place to go because we know that if the market has issues,

this bucket will not. So, let’s talk a little bit about the growth bucket then,

Raiden. Yeah, we think the growth bucket is really important as well, because when

we’re talking to folks, they go, well, I don’t want all my money to be so

conservative and I don’t get the upside because I think the markets do well. I

would agree with you. The markets do well. The key is over time. If I look at the

stock market over a period of time, it does well. I could also have very short

periods of time where it’s not doing well. You might think of things that pop in

your head like 2008, 2008, 2020, 2022,

and we could go on and on and on with these little periods. But then the market

dips and then it comes back and you just go, if I could have stayed in there,

that would have been great. So, what we want to do is construct the growth bucket

to where it is going to grow with market -like returns, good risk management,

even on that bucket. We want to have good risk management, which provides us to

have, we’re going to have things that are well diversified. We’re going to have

multi -layers to it. We’re going to have some that is going to be looking forward.

We’re going to have some that’s a little bit more dynamic as to what’s going on

right now, in the current times. And then we’re going to have even some investments

in that portfolio that are not, again, correlated to the stock market. They have

risk, but they’re not correlated to the stock market. That’s going to give us good

growth. Here’s the beauty of the concept. Now, if we take these two and we put

them together, is if the market is taking a pullback. And unlike if I had all my

money in this category, I have my income coming in, like what Murs just talked

about, in my income safety bucket. So, I can allow the stock market to pull back

some, and I’m not flipping out. I’m not losing my mind. I’m not saying get me out

of the market. I can’t take it anymore. Why? Because I’ve got the income safety

bucket that’s providing that layer of safety. It’s giving my income that I need to

take care of the essential needs and even some of my wants. And that just takes

all the pressure off. So now I can let the market do what the market does. And

I’m not worried about it because I know over time The stock market’s going to do

pretty good. I just need to be diversified. I need to make sure that I’m allocated

properly in the market, and I’m going to do really good. So, what does this end

result give me? I’ve got liquidity needs from my cash bucket. I’ve got income taken

care of in my income safety bucket, and now I have growth. When I do that and I

split that up, what I end up having is real peace of mind when it comes to these

different buckets. Now there’s another thing to think about that we need to dive

into MERS, and that’s the different tax buckets, different than risk buckets. But

again, we’re talking about income. So, what are the different tax buckets that we

have to think about marrying now to the investment strategy? Yeah, taxes and your

income are going to go hand in hand when we’re doing good sound retirement planning.

So those three buckets when it comes to tax classification are going to be your tax

deferred, or think pre -tax buckets, your taxable, and then your tax -free buckets.

I’ll walk through each one of these, starting with the tax deferred. This is the

401K, the traditional IRA, potentially a 403B or a CEP,

there’s a handful of different types of accounts. But the idea is we got a tax

break in the calendar year that we funded into these accounts with the promise of

paying tax when we start making withdrawals out of these accounts. And if we don’t

start taking withdrawals, eventually, currently around age 73 or 75, the government is

going to force us to take withdrawals on these accounts through what’s called

required minimum distributions. So, as this dollar balance grows, which is a nice

thing, right, we get the employer match in the 401ks that comes in. And so the

balance of this bucket continues to grow will also, so does our tax liability or

our future tax liability. So that’s an important one to keep in mind. and

bucket. This is really your, for most people, I think it would start as, hey,

I’ve got some extra cash laying around and I want to put it to work. Uh, and so

let me go buy some stocks, right? I open up a brokerage account, which is a

taxable or even called a non -qualified account. And this one’s taxed a little bit

different. The 401k, every dollar that comes out is taxed as ordinary income or look

at it as you’re creating a salary for yourself that’s going to be taxed very much

like your salary was. The taxable bucket or the brokerage account is not taxed on

withdrawals. It’s really taxed on transactions that happen within the account in that

calendar year. So, think the interest that is earned maybe from a money market that

you’re invested in, or think the dividends that your Apple stock is spinning out

quarterly, or if you sold that Apple stock for a gain or for a loss,

it’s going to have tax implications. So, interest, dividends, and capital gains are

how these accounts are taxed. The nice part about this is that your capital gains

have a separate tax bracket. So, there’s a little bit of a tax advantage there.

There’s also no age restriction, whereas in the pre -tax buckets and the rock

buckets, we do have this rule of 59 and a half, where if we take earlier, we

could run into some penalties there. The taxable bucket doesn’t have any age

restrictions, so it offers that flexibility, too. But the most exciting and the most

people wish they had more and more of is the tax -free bucket. That’s your Roth

IRAs. And then for some of you, you may have decided at some point to fund a cash

-value life insurance policy for retirement planning purposes. The beauty of these is

you don’t get any tax break up front for funding these accounts, but when we do

withdraw them, they are tax -free, as long as we qualify, and as long as the

withdrawal itself has met the rules for that particular type of account. So, think

about this is that I put in maybe over my savings career, I put in over $100 ,000

into a tax -free bucket, but it has grown, and unlike the 401K where while all that

has grown. So is my tax liability. There’s no tax liability in the Roth account. So

when you put all of the three of these buckets together, now we’ve got a good

diversification of tax assets, pre -tax, taxable, and then tax -free.

And so, what that allows for is a lot of flexibility when we’re trying to create an

income plan or withdrawal strategy. It lets us, you know, play around at the end of

the day with your tax brackets to make it the most optimal for you. Imagine if we

only have one and imagine that’s the pre -tax bucket, well, there’s not a whole lot

of things that we can do without paying a lot of tax to try to get those into

different categories, which we do all the time, by the way, is this idea of a rock

conversion. People have a lot in pre -tax. We want to get into a tax -free, and so

we can strategically do that. But if we’re walking into retirement with these three

buckets, it makes it a whole lot easier to implement a very nice plan. So, the more

we the more we have to play with as far as diversification factors in the

investment side, but also in the tax classification side, it’s going to make our

retirement income plans a lot a lot smoother. All right, let’s do a little scenario

here just to kind of wrap things up. Let’s say we got a very typical for us, a

client, their couple, they’ve got two million dollars that they’ve saved up. So

they’re good savers. Of that $2 million, they got a million dollars in tax -deferred

401ks and IRAs. They’ve got $200 ,000 in Roth. They’ve got $800 ,000 in savings in

brokerage. So now you see how this all ties back. Those are the different tax

budget. So now what they say is, here’s what we want. We both have Social Security

coming in, but Social Security is not going to quite take care of our essential

needs. We need some extra income, and we want this to be guaranteed and make sure

that it’s going to be coming in predictably. So, what do we do? We take a

percentage of those assets and we put it over in the income safety bucket that’s

going to provide those essential needs, maybe even some of the wants. We’re then

going to have the growth bucket funded and it’s there to grow the money. But it

also, as it grows, allows us to then take some withdrawals if we need to for some

fun things like cars and vacations and those kinds of things that we have extra

there if we need to or for inflation. And then what’s going to happen is, is

throughout the years, we just had this happen last year, is that the growth bucket’s

going to grow faster than the rate of the income bucket. So, what do we do? We

rebalance. We take some money from the growth bucket, and we move it to the income

bucket because now what are we trying to do? We’re trying to keep up with

inflation. And we just refill this process throughout the years. And it will just

keep you moving in such a nice way that you will not have to worry.

You will not have to have anxiety when the markets are doing what they’re doing.

You can rest. If you were to be in this office, and I say this all the time,

when the market’s down turning, you’re not going to hear the phones ringing off the

hook. Even in a COVID scenario, you’re just not going to hear it. And the reason

why is because people have a plan. They know what the plan is. They got the three

buckets. They understand their tax buckets. They understand all the different aspects.

It all helps them to rest and sleep well at night. So, Murs, you want to wrap us

up? Yeah, I would say, you know, there’s two categories of buckets that we talked

about, the investment side of bucketing, cash, safety, and then growth-oriented assets

and also, really understanding the tax side of the buckets of being the pre -tax,

the taxable and then the tax free. Having a good understanding of both of these

categories when it comes to investments and taxation is really how we’re able to put

together well -thought -out retirement -focused financial plans. And so if you don’t

have one of these or you need a better understanding of which buckets you have or

how to get into a place where you can walk into retirement without worries or

without stress, we’re always happy to have a conversation with you. The easiest way

to do that is head over to our website, POMwealth.net and you can find a place

where you can put in your information and we will have a conversation with you and

see if we can help, and we’re always happy to do that with you. All right, everybody. We’ll talk to you again next week.