Why Cash (Flow) is King

Now that you’ve retired, or are about to retire, one of your biggest questions will most certainly become: where will the money come from? 

It’s a great question.

Generating income in retirement is a complicated process with many decisions to consider, including which account to take money from, the impact of these withdrawals on your investments, and the tax implications. There are tons of things to consider, but I believe that the biggest challenge lies in understanding your cash flow needs. 

At the heart of it all

Cash flow is at the heart of the planning work we’ll do together. It requires us to picture your ideal retirement and put a price tag on what it’s going to cost. Most plans start with the assets you have and then show the income these assets will generate. This doesn’t really consider your unique retirement needs, which is why many don’t fully trust the final output. 

So, returning to the question at the start of this piece - where will the money come from? - we want to understand the income piece first, which means we need to start with your ideal retirement and work the plan backwards. 

Needs vs wants

Cash Flow in a general sense is understanding where you NEED to spend your money and where you WANT to spend your money. In a perfect world, you’d spend everything on wants, but this isn’t realistic, and herein lies a key step. 

Most people I speak with put soft caps on their goals (wants) because they think they can’t afford them (needs). My goal is always to work towards the blue sky version of your retirement: one where you look back on your years and feel you experienced more than you ever thought you would.

Why is this so important? For starters, everyone hates budgeting- it implies restricting and capping spending in the areas where you want to spend the most. Retirement is supposed to be different. You’re supposed to be a little more free, and to be able to splurge on the things you may have missed out on while you were saving.

With proper cash flow you can look at where you plan to spend, and then direct your money to the areas that provide the greatest value to you. All of our planning work starts here. Once we’ve blue skied your cash flow, we can secure your needs in retirement and free your mind (and your money) to say YES to your wants.

It’s a good feeling, I promise. Let me know when you’re ready to get started.