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.
- 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:
- It can help you feel safer about meeting your needs
- It provides a margin of safety during turbulent markets
- It positions you to make smarter financial decisions
- It gives you more flexibility to adjust as conditions change
- It helps you sleep at night
How It Works:
- Checking Account—To pay your lifestyle expenses
- Cash Reserve Account—Maintain 2 year’s expected living expenses and distribute a monthly “paycheck” to your checking account
- Extraordinary fund—Maintain cash reserves for extra expenses you will incur over the next 12 months
- Long-Term Investment—Long-term investment assets that include bonds maturing in 3-5 years
- 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
Retirement Answer Library
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