#1 Cash Flow
This is a series about the 6 key things to consider before you retire. If you would like to consider building a personalized Prosperity Financial Plan, don’t hesitate to reach out. Schedule a Meeting
Download Before You Retire Checklist
#1: Cash Flow Issues
One of the major hurdles for retirement is to truly understand cash flow. It’s important because what you’ve saved needs to last. And it has to last for an unknown amount of time. Retirement marks a major life transition, one that brings both freedom and uncertainty. Having a plan that’s thoughtful and tailor-made for you is critical. Many advisors like to look at cash flow needs as a flat expenditure every year. You’ve probably heard of the 4% rule. Boy, I hate when that “rule” is applied across the board. It’s a cookie-cutter approach to withdrawal strategies that fits almost no one. But let’s talk first about where you start and where you end up.
Well, actually, even before that, let’s talk about what you’re spending now, before retiring. You might be surprised by some things that can be freed up to save more for retirement or one of your other financial goals. And once we have that starting point, you and I can project some income streams from what you have already saved up for retirement, and what’s still to be saved. We will add in your social security and discuss when it might be best to start. Do you have a pension? Maybe you have some company stock. Let’s work all of those answers into your cash streams for your customized financial plan, so you will have confidence and clarity about the future.
The checklist asks you “Will your cash flow needs change” as you head into retirement? Well, I don’t know of a single person whose cash flow needs DON’T change. You’ll have expenses associated with work that you no longer have. Like going out to lunch with your work colleagues. Or buying a suit for the big meeting. Or getting your hair cut every six weeks. Maybe it’s gas and tolls for the commute. You can probably think of a bunch more. And you’ll have some new expenses to take their place! Everyone thinks about travel. We know that one already. But how about some new hobbies you’ve wanted to try out or expand? And signing up for classes to keep your brain sharp? There’s a whole new world out there. Some of it takes funding. And knowing (or at least guessing) what you might spend in the early years of retirement is an excellent place to start. (The CFP® board article on budgeting for your next passion is a good read.)
As you move into mid and later retirement years, often known as the “slow-go” and the “no-go” years, your expenses will change again. (Kiplinger’s (linked here) has a nice article articulating these three “go” concepts.)
All of these retirement-related expenses, over time, can and will change. And deciding what you might want at the end of the rainbow also helps challenge traditional uniform thinking about withdrawal amounts and cash flows. So is the 4% rule right for you? I doubt it. Your cash flow needs are YOUR cash flow needs.
It’s good to have a plan, and someone to talk to with the knowledge and resources to help. I’m here for you.
Important Disclosure Information: This blog is published by Prosperity Financial Planning LLC, a registered investment adviser with the state of Florida. Registration does not imply a certain level of skill or training.
General Information Only: The content provided is for general informational and educational purposes only and should not be considered personalized investment advice. Nothing contained in this blog constitutes a solicitation, recommendation, or offer to buy or sell any securities or other financial instruments.
No Investment Advice: This content does not constitute investment advice and should not be relied upon as such. Any investment decisions should be made only after consulting with qualified financial professionals. Past performance does not guarantee future results.
No Warranties: While we strive to provide accurate information, we make no representations regarding the accuracy, completeness, or timeliness of the content. We do not endorse third-party information and are not responsible for external websites or resources.
Risks and Relationships: All investments involve risk of loss. Reading this blog does not create an advisory relationship with Prosperity Financial Planning. Advisory relationships are established only through execution of a formal investment advisory agreement.
For more information about our services and important disclosures, please refer to our Form ADV Part 2A, available upon request or at www.adviserinfo.sec.gov.
Contact Information Prosperity Financial Planning LLC, Celebration, Florida. elizabeth@prosperityfinancialplanning.com