Cash Flow Changes During Retirement for End of Year Planning

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Published by Mark Ring

The New Year always brings a flood of new thoughts and resolutions regarding the future. One aspect of change is realizing how your cash requirements may need to be adjusted during the many stages of retirement. I recently had a conversation with a client whose dream was to travel around the world to play golf. And that’s exactly what he has been doing for the last 5 years or so. Now that he has been everywhere his heart’s desired, his expenses obviously have changed. Once we did a cash flow review, we realized the decrease in expenditures so we adjusted his monthly income withdraw from investments accordingly. The reduction in the withdraw rate will allow his wealth to refresh from a period of higher expenditures and withdraws.

After reviewing cash flow plans for many clients, I have noticed that at some point one’s overhead has a tendency to reduce. Whether due to a stabilization of lifestyle such as not traveling as much or just taking simpler trips, certain expenses disappearing like a mortgage or the kids are finally independent (way to go!). You may not necessarily notice a change in overhead immediately, unlike the scenario above, because the reduction can be gradual over time. One of the signals that may be occurring is when you notice or make mention of how big the balance is in your checking account. This is a sign that it’s probably time to review your living expenses and make any necessary adjustments to your investment withdraw rate. While having an increasing saving or checking account balance may feel good, it is simply lowering the amount of one’s wealth not invested for future needs. When completing an annual review and updating any changes in cash flow, we have also adjusted the withdraw rate from investments to help ensure that your wealth is in a position to be most effective for your future.

Do you or someone you know need to evaluate your cash flow in retirement? Contact Jacob William Advisory today for a complementary review.

You can also click here to download our whitepaper and learn how to minimize risk factors, the three stages of spending and what you can do to reduce your financial stress and anxiety.

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