#17 How to Manage Your Cash Flow During Retirement [Podcast]

How to manage cash flow during retirement is probably the question I am asked most often.

When you retire and stop receiving a paycheck each month, how you manage drawing from your savings can have a big impact on your financial health.

In this episode, I outline the method we use with our retiring clients. It is called the Cash Flow Reserve system.

I also explain why it is important that you ask your Financial Advisor if they have a written succession plan.

Less Than 10% of Advisors Have a Succession Plan

This is a scary number considering that if your advisor is unable to serve you due to injury or death, the retirement plan you’ve put in place could be in jeopardy.

  • Who will service you?
  • Who will advise you?
  • What communication will you receive?
  • Who will manage your assets?
  • Is your plan well organized?

These are just some of the important questions that you need answered to ensure your retirement plan is not disrupted.

I discuss:

  • the importance of asking your advisor about their written succession plan
  • what items to look for
  • the communication plan that should be in place
  • how to protect your retirement plan in the event your advisor is suddenly unavailable.

This month, I’ll post a checklist in the Retirement Answer Library of items you should look for in your advisor's succession plan to assure you're protected.

Listener Question:  Lynn asks, “How do I manage my cash flow without a paycheck during retirement?

Not receiving a monthly paycheck during retirement can be unnerving. In retirement, it is important to have a system draw from savings and still feel secure about your financial future.

I outline the Cash Flow Reserve system we use to help clients cover their retirement expenses.  It's simple and something you could do yourself.

The Benefits to You:

  1. It can help you feel safer about meeting your needs
  2. It provides a margin of safety during turbulent markets
  3. It positions you to make smarter financial decisions
  4. It gives you more flexibility to adjust as conditions change
  5. It helps you sleep at night

How It Works:

  1. Checking Account—To pay your lifestyle expenses
  2. Cash Reserve Account—Maintain 2 year’s expected living expenses and distribute a monthly “paycheck” to your checking account
  3. Extraordinary fund—Maintain cash reserves for extra expenses you will incur over the next 12 months
  4. Long-Term Investment—Long-term investment assets that include bonds maturing in 3-5 years
  5. Review and adjust every 6 months

This week I’ll post a detailed outline on how to build your Cash Flow Reserve system  in the Retirement Answer Library

Resources Discussed

Retirement Answer Library

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