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159. Why Your 401(k) Balance Won't Tell You If You're Ready to Retire

Season #2

Episode 159: Why Your 401(k) Balance Won't Tell You If You're Ready to Retire (The Paycheck Test)

You've spent decades building your 401(k), but how do you know when you actually have enough to retire?

Maybe you've reached $1 million in retirement savings. Maybe you're getting close to the number you've always had in mind. But here's what your 401(k) statement can't tell you: Will that money provide enough reliable income, after taxes, to support the retirement you want?

The truth is, having enough saved and having enough to spend are two very different things.

In this episode, Amanda Hanquist of Fit Wealth Advisors explains why your retirement account balance is only one piece of the retirement puzzle—and what you should be looking at instead.

You'll learn how taxes, market downturns, Social Security decisions, and your retirement lifestyle can all impact how much income your savings actually provide.

What You'll Learn in This Episode

  • Why your 401(k) balance isn't your retirement paycheck: The difference between accumulating wealth and turning your savings into dependable retirement income.
  • How taxes affect your retirement savings: Why a $1 million traditional 401(k) doesn't necessarily mean $1 million in spending power.
  • The hidden risk of retiring during a market downturn: How poor investment returns early in retirement can impact how long your money lasts.
  • Why retirement timing matters: How Social Security, Medicare premiums, and required minimum distributions (RMDs) can influence your retirement income and taxes.
  • How your retirement lifestyle affects your income needs: Why spending often changes throughout retirement and how to prepare for those changes.
  • The six questions every future retiree should ask: A practical retirement readiness scorecard to help you identify what's missing from your plan.

Episode Chapters & Timestamps

 

  • 00:00 – Is Your 401(k) Balance Enough to Retire? Why reaching your retirement savings goal doesn't necessarily mean you're financially ready to retire.
  • 00:20 – Retirement Savings vs. Retirement Income: The difference between how much you've accumulated and how much you can actually spend in retirement.
  • 01:05 – How Taxes Affect Your 401(k) Withdrawals: Why your traditional 401(k) balance isn't the same as your after-tax retirement spending power.
  • 02:20 – The Hidden Risk of Retiring During a Market Downturn: Understanding sequence of returns risk and why market performance during your early retirement years matters.
  • 03:35 – Social Security, Medicare & Required Minimum Distributions: How retirement timing decisions, Medicare premiums, and RMDs can impact your income and taxes.
  • 04:45 – Planning for Your Retirement Lifestyle: Why your spending needs may change throughout retirement and how to plan for the life you want to live.
  • 06:05 – The Six Questions to Ask Before You Retire: A practical retirement readiness checklist covering income, taxes, withdrawal strategies, market risk, and timing.
  • 07:15 – How to Know If You're Financially Ready to Retire: Why a coordinated retirement income plan matters more than reaching a specific 401(k) balance.

 

The Retirement Paycheck Test

Instead of asking, "How much do we have saved?" start asking:

"Can we reliably spend what we want, after taxes, in good markets and bad, without running out of money?"

That's the question a comprehensive retirement income plan should help you answer.

Because retirement readiness isn't about reaching one magic number. It's about creating a coordinated strategy for your investments, income, taxes, and the life you want to live.

Connect With Fit Wealth

At Fit Wealth, we believe retirement planning should be about more than reaching a certain account balance. It's about making intentional financial decisions so your money can support the life you want to live—for years to come.

If you're approaching retirement or already retired and wondering whether your financial plan is as tax-efficient as it could be, we'd love to learn more about you.

Advisory services are offered through Fit Wealth Advisors, LLC. d/b/a Fit Wealth, an Investment Advisor in the State of Nebraska. Insurance products and services are offered through Fit Wealth Insurance, LLC, an affiliated company. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.