What Are My Cash Flow Options, And How Will These Affect My Retirement Plan?

Timothy Brown |

By Timothy Brown, MBA, CFA®, CFP®, RICP®, AIF®

You’ve been preparing for your retirement for decades. You’ve worked hard for your money, and now your money is working for you. So when you’re ready to retire, it’s time to consider the limits, options, and opportunities you have with the wealth you’ve accumulated. 

The worst possible outcome is to overspend in the early days of your retirement and run out of money too soon. To prevent this from happening to you, we’ve created this helpful guide you can follow to make sure you enjoy your golden years without the risk of running out of money. 

Budget Carefully

We often think of budgeting as a task young people do to save and live below their means. But when you’re retired, it can be even more important to budget carefully and keep a close eye on your income and expenses. Unlike during your working years, you can’t just work overtime or ramp up your business when unexpected expenses crop up. It’s not easy to quickly find ways of bringing in more income when you’re retired.

You should know at all times exactly where your money is coming from and how you’re spending it. If you start to overspend on expensive dinners out, you want to see where that’s happening in your budget so you can make changes. It’s not necessary to always pay for your adult child’s dinner at family gatherings; let them pick up the check every once in a while. 

Experiencing Change? Let Your Advisor Know

When you monitor your income and expenses closely, you’ll know immediately when there are changes in your income sources or expenses. A likely expense will be increased medical costs as you age, so you should adjust your plan to account for those costs as soon as they arise. Similarly, changes in the markets might affect your income sources. These changes don’t have to be devastating to your retirement, but they should be dealt with immediately.

When you notice significant changes in your income or expenses, take action sooner rather than later. Reach out to your financial advisor as soon as possible to mitigate these changes, develop a plan for recovery, or make adjustments and avoid jeopardizing your savings.

Find A Balance

Many people expect their expenses to go down in retirement, which might be true in some ways. Perhaps you’ve paid off your mortgage, freeing up a significant amount of your monthly budget. Hopefully your children will have vacated your home and be providing for themselves 100%. And you’re likely saving on transportation costs as you no longer have to commute to work every day.

But you’ll probably notice other expenses going up. For instance, maybe you’ve increased the time you spend traveling. And with extra time on your hands, you might be playing more golf or enjoying other recreational activities. It can be tempting to spend more money in retirement, and if you’ve planned for these expenses, you should, by all means, enjoy them. 

But don’t forget to account for emergencies, increased medical costs, and the possible need for long-term care. These are likelihoods in old age and should hold an important place in your retirement plan. Your financial planner can help you find the balance between what you can confidently spend for enjoyment and what you should save for the future.

Partner With A Planner Who Helps You Find Balance

As financial planners specializing in retirement, our job is often to help you maximize your income so you can enjoy your golden years without jeopardizing your savings. We do that by helping you establish a range for spending and maximum withdrawal amounts, with manageable adjustments needed if you’ve spent too much or the markets experience a decline.

If you’re not sure what you can safely spend and enjoy, partner with trusted professionals like our team at Brown Wealth Management, LLC. We can give you expert advice and provide a more objective viewpoint of your situation and options. Schedule a free introductory call by reaching out to us at (952) 303-6715 or info@brownwealth.com.

About Tim

Timothy Brown is founder and president of Brown Wealth Management, an independent, full-service wealth management company that helps individuals and families prepare for all of life’s milestones and events. With more than 20 years of experience in the financial industry, Tim strives to help his clients live happier, more fulfilling lives with the confidence that they have been good stewards of their finances. Tim has a bachelor’s degree in finance and accounting from the University of Colorado and an MBA from the University of Minnesota’s Carlson School of Management. In addition, he holds a rare combination of credentials: Certified Financial Planner™(CFP®), Chartered Financial Analyst™ (CFA®), AIF® - Accredited Investment Fiduciary™ (AIF®), and Retirement Income Certified Professional® (RIPC®). Tim has been recognized for his hard work by receiving the Five Star Wealth Manager award in both the Mpls.St.Paul Magazine and Twin Cities business magazine since 2013. 

When he’s not working, Tim enjoys spending time in Eden Prairie with his wife, Stacey, and their four children. You can often find him keeping busy by staying fit, pursuing a black belt in Tae Kwon Do with his three boys, assisting kids with Boy Scouts, and attempting to read two books per month. To learn more about Tim, connect with him on LinkedIn.