Saving for Retirement with Financial Advisor Joel Cundick — Episode 159

How should we be saving for retirement when there are so many other needs around us.

Today’s guest is a financial advisor at Savant Wealth.

Big thanks to our sponsor The Organized Home Family Routines The Online Prenatal Class for Couples

In this episode

Prioritize retirement savings over college savings

Best time to save for retirement

How the financial media makes money

How Dave Ramsey might not be helping us

Prioritizing experiences

Other things that might interest you

Our saving for college episode

My dad’s episode on the economy of the home

Producer: Drew Erickson

Transcript

[00:00:00.190] – Hilary Erickson

Hey, guys. Welcome back to the Pulling Curls Podcast. Today on episode 159, we are talking about saving for retirement. Let’s untangle it.

[00:00:18.810] – Hilary Erickson

Hi. I’m Hilary Erickson, the curly head behind the Pulling Curls Podcast: pregnancy and parenting untangled. There’s no right answer for every family, but on this show, we hope to give you some ideas to make life simpler at your house. Life’s tangled, just like my hair.

[00:00:40.210] – Hilary Erickson

Today’s guest is a financial advisor with Savant Wealth Management. But most importantly, he is my cousin. And I have to tell you guys, he’s honest in here that he has not always made the most gracious financial choices. The best… he’s not always made the best financial choices. And so it’s something we’re all working through. Could we have saved better when we were young? Yes. But the best time to start is now. So I want to introduce today’s guest, Joel Cundick.

[00:01:05.830] – Hilary Erickson

Do you ever just feel like it’s unfair that some people can have company over at a moment’s notice? Their house is just super easy to clean up and they can relax on the couch with Netflix, where you feel like you always have things to do around your house that can totally be you. The organized home is here to help you simplify organizing. We’re talking about decluttering zones, organization systems that actually work. We’ve got assignments and challenges. I hope you’ll join us. You can use coupon code UNTANGLED. Look for the organized home link in the show notes.

[00:01:35.650] – Hilary Erickson

Hey, Joel. Welcome back to the Pulling Curls Podcast.

[00:01:38.320] – Joel Cundick

Hilary, it’s great to be with you.

[00:01:40.260] – Hilary Erickson

Yeah. So my dad’s podcast was ridiculously popular, where he gave us great advice, like, make more, spend less. Right?

[00:01:47.930] – Joel Cundick

I loved it. I listened to it. I actually listened to it again recently because I knew I was going to be talking to you again. I thought, how am I going to even come close to claim there’s no way.

[00:01:55.460] – Hilary Erickson

There’s just no way.

[00:01:56.580] – Joel Cundick

You can’t. It’s not possible.

[00:01:58.310] – Hilary Erickson

We saw that my people want to learn more about money, and I bet since he did that podcast, which will link to the show notes, if you haven’t listened to it, they probably even want to know more about money because money is getting sketchier every day.

[00:02:10.430] – Joel Cundick

I feel like, yeah, this is kind of a year. Everybody’s got money on their minds, right?

[00:02:15.320] – Hilary Erickson

Yeah. I think we all thought during Covid, everything would fall apart and the government sort of propped us up and the fact that no one was spending anything on travel and now we’re here, the.

[00:02:25.800] – Joel Cundick

Markets went crazy, and then they reminded us this year that they go crazy the other way.

[00:02:30.340] – Hilary Erickson

Yeah. So today we’re just talking about retirement. Last time we talked about saving for college, which was awesome because I have another kid to go into school this fall.

[00:02:40.270] – Joel Cundick

As do I. And one more year. I’ve got one in right now and another about to start, so yeah, so much money.

[00:02:46.800] – Hilary Erickson

Okay, but should we still be investing?

[00:02:51.500] – Joel Cundick

Absolutely. While we’re on college, let’s just use that as a little bit of transition. Number one thing I’m going to say here to tie over from my last conversation is you should definitely prioritize retirement saving over college. Saving?

[00:03:04.460] – Hilary Erickson

Yeah.

[00:03:04.880] – Joel Cundick

The number one responsibility you guys have as adults is to make sure that your kids are not going to have to help you out financially in the future. And we can get loans for college. We cannot get loans for retirement. So the number one responsibility and a lot of I know you work in kind of people who are having babies, and one of the things that’s very natural to think about when you have a baby is, oh, I got to start a college fund for them. Yes, you do. That’s a good idea. But if you’re not first already saving enough for retirement, prioritize that that matters more.

[00:03:32.200] – Hilary Erickson

Yeah. And side note, I’ve seen a lot of people who instead of asking or gifts for the first birthday, which are completely useless, and usually my parents bought every loud toy in the store and shipped it to my house.

[00:03:43.260] – Joel Cundick

How helpful.

[00:03:44.210] – Hilary Erickson

Say, if you want to send something small, that’s great, but would you want to put $100 in their college fund? Right. Because if you put in a college fund when they’re one, that is a huge difference.

[00:03:52.050] – Joel Cundick

When they’re 18, time matters. And that’s a great bridge towards the next thing in retirement. Right. Time matters. So you want to start early. That’s something that Clayne talked about in his podcast. I’m going to talk about that more. So let me give you a quick example. If you’re 25 years old and you put $5,000 aside and we just assume that it’s going to earn 8% per year, which I know everybody feels like in the middle of market downtrends, oh, that’s never going to happen. It actually is very average level of return for markets over the long term, if you wait 40 years on that, just leave that $5,000 in the oven, so to speak, for 40 years, it’s going to be worth $110,000 at the end of that. If instead you start at age 35, you put that same $5,000 aside and you’re age 35, it’s going to be worth about $50,000 in 30 years, which is still great.

[00:04:34.160] – Hilary Erickson

Still put the $5,000 in, it’s still great.

[00:04:37.510] – Joel Cundick

Differently if your kid has a high school job or for some reason you’re able to put some money aside for them at 15 and they’ve got 50 years, that $5,000 will be worth $235,000 in 50 years. So compounding, they talk about the miracle of compound interest. It is really powerful. And if I could make one big change for me going back in time, newly minted college grad, all kinds of different priorities, but an employer that was willing to match my savings for retirement, I would have taken more advantage of that right. Put money aside. It doesn’t feel like you can do that. And we can talk in a little bit about ways to save incrementally, but maximize a match when you’re young, it’s the number one thing you can do to make sure you have a strong retirement in the future.

[00:05:21.510] – Hilary Erickson

And don’t feel like you have to put in thousands and thousands every month. Just put in what you can. Take that match because usually the match is not thousands and thousands. I don’t know, maybe I worked for the wrong people.

[00:05:31.870] – Joel Cundick

Well, I mean, it depends on it, right? I mean, you work for colleges and universities are great. The federal government is actually really good, too, because they got a pension and retirement plan as well, 401K. But any employee, look, they’re going to match. Even if it’s only $0.50 on the dollar for your 1st 3% you save, it’s still better than any kind of return you can get anywhere else. Right. If I set aside $1,000 and they put aside 500 for me, that’s an automatic 50% return on my money. I can’t find that anywhere else.

[00:06:02.070] – Hilary Erickson

Yeah. So new slash, Joel and I, I’m pulling away the curtain here are over 45, just so you guys know.

[00:06:07.820] – Joel Cundick

Yeah, that’s right.

[00:06:09.920] – Hilary Erickson

Although I think you’re just 45, right? I just turned 46.

[00:06:13.310] – Joel Cundick

No, I’m about four months away from 46.

[00:06:17.060] – Hilary Erickson

Yeah. So we need the advice for the late bloomers, too.

[00:06:20.150] – Joel Cundick

Well, and that’s another thing I’d say too. Right. It’s very easy for somebody in their forty s to listen and say, oh, my goodness, I should have started my 20s. It’s all over. No, it’s not all over. Best time to save for retirement, obviously, ten years ago, but the next best time is today. Get started. Wherever you’re at, start setting money aside and it’s going to help you in two ways. When you are able to put money aside for the future, you get used to living on less and you create more. So that’s burning the candle at both ends. We get used to living on less, so we’re not going to have as big a need from our savings at retirement, and our savings are going to be larger. And there’s great catch up provisions in the United States. If you’re a 50 or over, there’s extra money you can put aside. There’s a bill going through Congress right now that might even supercharge that. Look at what you can save. And even if it’s just $1,000 a year right now, and that becomes 2000 next year and becomes 3000 a year following, I’m much more concerned when I work as a financial advisor on the direction of savings than exactly what is being saved this year.

[00:07:18.460] – Hilary Erickson

Yeah, I love that. And also, hopefully you’re going to get raises.

[00:07:22.290] – Joel Cundick

Yes. And if you can that’s what I’m saying about that incremental. That’s one of the ways I could have done it if I was in my early 20s. Right. I have an amount that’s coming in each month, but I know I’m going to get, what is it, a two or 3% raise next year? If I can increase what I’m deferring by 1%, I’ll still have a bigger paycheck right. Coming home to me, but I’m going to automatically just, hey, next year, 2023 will go to 2%. 2024, I go to 3%. And by 2026, I’m saving 5% of my income, which is getting me in the right direction.

[00:07:52.410] – Hilary Erickson

Yeah. Okay. Is there a percentage that’s ideal?

[00:07:55.400] – Joel Cundick

Yeah, if you’re in your 20s, it’s really best to start at 10%, and that includes employer match. So if I’m lucky enough to be an employer, that saves 3% for my 3%, then I have to put in seven, my employer puts in three. I’m getting to about 10% a year. If I’m starting in my 30s, I’d really rather see that be around 15% of my income again, including employer match. And if I’m starting in my 40s, it really ought to be about 20% that you’re shooting for to get to. The big reason for that is you think about an amount you’ve got to save for retirement. When you stop working and turn on the spigot for that savings you’ve got, you can really only reasonably take about 4% of that balance starting out. So even if you got a million dollars saved, it seems like, oh my goodness, that’s like I’m set. Well, you can take about $40,000 to maybe $50,000 a year, depending on how you have invested reasonably as a starting withdrawal from that million dollar save.

[00:08:48.170] – Hilary Erickson

Okay, good call. I was really aiming for a millionaire.

[00:08:51.100] – Joel Cundick

Yeah. I mean, that used to be right. Like a big deal, right? The old millionaire. Yes. Depending on where you live in the country, it still works. And depending on what your expenses are, we’ve got Social Security that can help out there. And my thumbnail, I’d say on Social Security, people are saying, oh, I’m not going to get that. Yes, you’re going to get that. If Congress can’t get attacked together and fix it, then you’ll get even 80% of what are currently promised benefits, and then Social Security would be secure for another 50 years. So it’s not like Social Security is not going to come in. It’s just that I wouldn’t make that my thought of, oh, well, I’ll have everything covered by Social Security.

[00:09:24.180] – Hilary Erickson

It won’t be okay, awesome. What other tips do you have?

[00:09:27.420] – Joel Cundick

Yeah, so the next thing I’d say is make sure when you’re putting money into your retirement plan that it is being invested in your retirement plan. This is fixed a lot over the last decade or so. It used to be that the default, when you were saving for retirement, it would go into a cash or money market fund inside the retirement account. So people would come to me and they’d say, well, I’m saving money in my four hundred and one k and say, Great, what’s it saved in? They’re like, well, it’s in my 401K. Yeah, but how do you have it invested inside? There often times they go in and look, and it was like in a money market fund and wasn’t earning anything. So the employers have done a much better job of converting over to oftentimes things like target date funds. So what that means is that it will just be a fund that is allocated towards the closest estimated retirement date they would use for you. So if you’re 45, they’re saying that, yeah, we’ll put you in a target date 2040 or 2045, assuming you’re going to retire roughly that year, and then it will automatically be allocated for you, that’s fine.

[00:10:22.820] – Joel Cundick

I’d say targeted funds are a little on the expensive side, but what I love about them is that they keep it simple and then you’re not as motivated as pushed. You don’t feel the need to change allocations every time the market does something like what it’s doing in 2022.

[00:10:38.740] – Hilary Erickson

Right. Well, I mean, that would hurt if you went in and it was just because the money market is going to make, what, 1%? Not even that.

[00:10:45.530] – Joel Cundick

Yeah. It’s not going to keep pace with inflation. Inflation is the big bugaboo. Right. And finally, people are remembering that now. But really, over 30 year retirement, if you start withdrawing at $4,000 a month, you’re not going to only need $4,000 a month 20 years in the future, it’s going to be a lot more inflation is that incremental cost that really eats in some people’s expenses. And sometimes people come to me and say, well, I don’t want it in markets because markets are risky. Yeah. Over the short term, markets are risky. Over the long term, they’re really not. The risk is actually not maintaining your purchasing power and what inflation is going to do to your savings if you don’t have it invested in good long term structure. So the target date fund is a really good starting example of that. But what I generally say to people is put more in stock than you think you ought to have in stock and leave it there. And maybe that’s relevant for this year in particular, where we’ve got markets going haywire. S Amp P 500 is down over 20% year to date, and people are saying, oh, my goodness, I’ve got to make changes.

[00:11:41.270] – Joel Cundick

Well, that’s how the financial media makes money, right? They make money by getting you to watch their program, but to read their article and to feel a sense of panic that you need to do something. So I kind of phrase it as don’t arrange deck chairs in the middle of the storm. It seems like a really good idea to make adjustments in time. Oh, I got to read the Wall Street Journal more. I could just know so much better what to do with my money. No leaving money in place. Just leaving in that target date fund and doing your best job you can to forget about it and remembering that pay over time. Yeah, there’s going to be ups, there’s going to be downs, but the trend is generally up over decades. That’s going to serve you much better than feeling a need to read these articles and the clickbait ones that are always the worst or say something, hey, what investors need to do right now, generally, you can assume that an article that says that is going to have the wrong idea unless it says inside the article, do nothing, which is not very exciting advice.

[00:12:32.860] – Hilary Erickson

Drink more water, go on a walk.

[00:12:34.680] – Joel Cundick

Yes. Take a breather. Do something to destress. Don’t feel like you need to become a master investor. That’s not how money is made for retirement. How it’s really made is by oh, and I’m going to sound like claim here. Save more, spend less. Right?

[00:12:52.360] – Hilary Erickson

So true. It’s the worst best advice ever.

[00:12:55.200] – Joel Cundick

Worst best advice.

[00:12:56.240] – Hilary Erickson

So I love that because I think when I first went in to pick my funds, Hilary circa, what was it, 1998, my pediatrician that I worked for allowed me to pick funds. So I went in and I thought I was going to vomit when I saw all of small cap, large cap, and I was like, I don’t even know what a cap is. I guess I like larger. But I love that initially you could just pick a target date because that probably would have been wiser for Hilary because I wasn’t saving a ton with them. But it was something rather than just being like, well, money market sounds good.

[00:13:29.960] – Joel Cundick

Boom. Yeah, you don’t want to do that.

[00:13:31.310] – Hilary Erickson

Such a loss.

[00:13:31.850] – Joel Cundick

And then certainly there are times where it feels better. It feels like money market would be even better right now. Right? Well, I’m going to keep it safe. No, now is the time you want to be buying. We’re all in the calm able to say, well, we want to buy low and sell high. And then the market goes down, like, whoa, run for safety, get away. No, that’s not the right strategy at all. Keep buying. It’s called a dollar cost averaging strategy. When markets are low and you’re putting the same amount aside for retirement, you’re getting to buy more. Everything’s on sale. And one of the ways it’s been really helpful to my clients is think about it like your house. If somebody came to you tomorrow and said, your house is worth 20% less than it was yesterday, would you run out and say, I got to sell my house right away? No. And when it’s a tangible asset, it feels somehow different. You feel, well, no, that’s not the real value of my house. My house, I’m sure we’ll recover over time. Think of your portfolio that way. Right. It’s the same thing.

[00:14:20.300] – Joel Cundick

It feels scary because I can’t touch it. It’s not tangible. I don’t know what it is. I feel uneducated.

[00:14:26.000] – Hilary Erickson

And that graph, when you go in, when you’ve saved a lot for retirement and you go in and look at the graph and you see how much you lost in just a day sometimes. Oh yeah, that hurts. I just don’t go in. Like I go in, I don’t even look. I just invest because mine, because I’m a small business owner, it won’t go in a target fund. I have to invest every month, just FYI, for anybody who’s a loser like me. I don’t even look at the graph. I’m just like trade. Don’t look at the graph, just hit trade.

[00:14:49.060] – Joel Cundick

Yeah. I’ve got a guy I really like, Carl Richards, who has great content on retirement. And he has talked about he does drawings. And one of his drawings the other day was, do you want to look at days which has all kinds of volatility, or do you want to look at decades? And decades is a hockey stick, right? Over time, markets go up. So it’s all about where you choose to put your focus. The other thing I’d say, just while house come into it, I know a lot of people who try to pay down their house really early on and they get super focused on I got to get rid of my mortgage and then I can save for retirement. That advice really comes from another time. And now we are about 6% mortgages. So I don’t know if people are entering like a 6% mortgage. Maybe it’s different advice, but most of your listeners probably are at three 4% mortgages and long term portfolios earn six, seven, 8%. The arbitrage is in your favor. Save for retirement. Prioritize that low interest debt is great debt. Now, if you’ve got credit card debt, absolutely be working to get out of that.

[00:15:43.820] – Joel Cundick

If you got student loan debt, absolutely be working to get out of that. But don’t be trying to accelerate getting out of a mortgage. That is great debt and tax deductible.

[00:15:51.740] – Hilary Erickson

That’S good advice because I think there is a lot of pressure to feel like my home is paid off. Dave Ramsey thank you.

[00:15:57.260] – Joel Cundick

Yes.

[00:15:57.770] – Hilary Erickson

That may not be helping us.

[00:15:59.080] – Joel Cundick

He’s excellent on getting out of credit card debt, on getting out of student debt, all the kinds of stupid debt we get into. Even like the, hey, buy a car for cash. I like that advice, right? A car is a depreciating asset. But then he kind of gets into this crazy talk where he’s like, get your home paid off as soon as possible. Hey, I’m all about that, right? Pay off your mortgage soon, but only if you’ve already got enough going into save or your retirement, because that is going to compound.

[00:16:21.690] – Hilary Erickson

Yeah. And everybody needs to be thinking here we’re thinking decades. When I talk to my dad about his retirement, because he’s in his 80s, it’s a very different talk. I’m like, I don’t I mean, two years ago, I was like, shouldn’t we be pulling some out of stock? My dad cannot put it in the money market because he’s him. But it’s different when you got, like, ten years left.

[00:16:41.570] – Joel Cundick

It’s two very different stages of life. When you are accumulating for retirement, downturns are helpful. When you’re spending in retirement, downturns are harmful. So now you want to make sure you have enough in reserves, right. Defensive investments that you can draw from those for years if necessary, and just let the stocks do their thing. So it is two different stages of life.

[00:16:59.620] – Hilary Erickson

Yeah, but I’m guessing we don’t have a lot of 80 year old listeners. Even my parents rarely listen. Let’s be honest.

[00:17:05.610] – Joel Cundick

They should listen more. Come on.

[00:17:07.540] – Hilary Erickson

All right, one more piece of advice for us.

[00:17:09.440] – Joel Cundick

One more piece of advice. I would say, lastly, to just make sure that you are prioritizing experiences. All right? This is probably not what maybe what you expect from a financial advisor, but I would say people don’t enjoy stuff near as much as they enjoy experiences long time. We’re going to remember them more, and I know that is going to play well. And you do a lot of travel. I know. And travel recommendations. It is okay to spend on experiences, and especially I work with a number of couples who have gotten themselves to a point where they feel like every extra dollar that they get has to go into savings, and they push past a sane amount of savings and go to like, no, we’ve got to be saving 30%, 40, 50% of our income. And I’m saying no. If we can sit down together and just make sure retirement boxes are checked, college savings boxes, if you have them are checked and that the mortgage is being paid, we should be going out and investing in experiences. All right. The time we spend together as family.

[00:18:05.730] – Hilary Erickson

I love that my dad mentioned in his, though, that are you getting the same benefit from that 10th month of Netflix that you got from the first? Right? Because the first I can watch anything. And then the 10th, you’re like, Netflix, let’s see what’s on another one. Right?

[00:18:18.560] – Joel Cundick

Yeah. And that really can make a big difference if you track or you can use one of these online services, mint.com PersonalCapital.com tracking your expenses, just being aware of where the money is going can make a big difference.

[00:18:29.730] – Hilary Erickson

Right. And am I still enjoying that?

[00:18:32.130] – Joel Cundick

Yes.

[00:18:32.560] – Hilary Erickson

Because I’m not saying Netflix is bad. A lot of times we’ll take a break for like, three or four months, and then I’ll be like, oh, I missed midwife. I got to go back. Whereas right now, I’m like, Call the midwife. I’ve seen it.

[00:18:42.920] – Joel Cundick

Yeah. And how many things are there like that? How many gym memberships sit around unused for months at a time? How many subscription based things do we accumulate and then just not leave it when we’re not getting full utilization from them. Be deliberate. Be aware of where your money is going and make sure that’s where you want it going.

[00:18:59.870] – Hilary Erickson

Yeah, but same for experiences, because I see a lot of people spending a ton of money on Disney March when I’m like, Wouldn’t you rather have another trip?

[00:19:08.170] – Joel Cundick

Absolutely.

[00:19:09.100] – Hilary Erickson

Right?

[00:19:09.660] – Joel Cundick

Absolutely.

[00:19:10.990] – Hilary Erickson

You’re going to remember as a mom, you’re going to think back to those times on the teacups where your kids almost made you vomit, but will you remember that Disney sweatshirt? I don’t know.

[00:19:18.540] – Joel Cundick

That’s right. And you want is stuff that’s going to be memorable, and it is the experience that will be memorable, not the stuff.

[00:19:24.330] – Hilary Erickson

Yeah. All right. Great advice, guys. The other thing I think is to just try and stay positive, because I think the media has us just, like, losing our minds, don’t you think?

[00:19:32.060] – Joel Cundick

Paralysis and anxiety. Absolutely. That’s what the media is interested in, because they want you to read more. Right. And it’s easy to get addicted by it. Stay away from it. Turn off the TV, go for a walk.

[00:19:41.620] – Hilary Erickson

Yeah. And definitely listen to this podcast speaking from the media while you are speaking from the media. But try and stay positive, guys. The money is going to be there. It’s a long term game. Save a little, spend on experiences. I love it.

[00:19:55.370] – Joel Cundick

Well, if there’s anything that your listeners want to hear more of there, right? I mean, we can rip on any number of things here, right? There’s so many topics we can cover, so I’m always happy to come back.

[00:20:03.520] – Hilary Erickson

If you guys want to know more about finances, there will be an Instagram post over at Pulling Curls. Instagram. Tell us what you want to hear about. If it’s more about, like, what IRAs or whatever, tell us there, and then you can have a nap while we talk about IRAs.

[00:20:16.870] – Joel Cundick

I’ll be having fun.

[00:20:17.910] – Hilary Erickson

Thanks.

[00:20:18.460] – Joel Cundick

My pleasure. Hilary, take care.

[00:20:19.920] – Hilary Erickson

Okay, I hope you guys enjoyed this episode. I think the most important thing to remember is the best day to start saving is today. We can’t fix what didn’t happen in the past, but we can fix what starts today. So there’s lots of easy ways to do it. Please don’t be I a lot of times am just put off by all those funds like we were talking about or like all the boxes I have to check when I make that, when I fill out that form. So ask questions of the people. There’s usually people that you can call to help you fill out those forms. Ask the questions. Don’t feel stupid. Get retirement plans set up and get started.

[00:20:50.860] – Hilary Erickson

Do not miss next week’s episode. We are talking about pain management in the labor room, which, if you’re not pregnant, skip to the next week where we are talking about parenting when you’re feeling more like an introvert, which I think has a lot of good discussion I can’t wait to see you in those episodes too.

[00:21:07.110] – Hilary Erickson

Thanks so much for joining us on today’s episode. The Pulling Curls podcast grows when you share us on social media or leave a review. If you do, please tag us so that we can share and send you a virtual hug, which, frankly, is my favorite kind of hugging. Until next time, we hope you have a tangle free day.