If you are five years or less away from retirement, you're close enough to calculate approximate income and expenses. Your goal is to have enough money to live on comfortably and not outlive your assets. You need to match your expected lifestyle expenditures with your projected cash flow and provide for contingencies, such as extended illness, rapid inflation, and losses in your investments. Cash flow planning is an important part of retirement planning.
Are there other regions of the country where opportunities are better for continued employment or leisure activities? Are you concerned about living in an area where there are better local services (transportation, medical facilities)? How about more affordable housing and senior citizen communities? Make sure you list your priorities and start acting now.
Sources of Cash during Retirement
During retirement, you may have the following sources of cash:
Other sources of cash that can be tapped into during retirement include liquidation of your investments, and cash from a price trade-down in residence (see the section The Role of Your Home in Retirement for more information). Add up all your sources of cash to determine your cash inflow during retirement. You can then compare this to your cash requirements during retirement to get a good idea of where you stand.
Uses of Cash During Retirement
Uses of cash during retirement include basic expenditures, discretionary expenditures, and money for contingencies. Review the helpful hints below for determining retirement expenses to project your uses of cash during retirement.
Helpful Hints for Determining Retirement Expenses
Cash Flow Calculation
Calculating your expected cash flow in retirement is relatively easy. Just take your cash inflow and subtract your outflow and you've got your net cash flow.
If you have a negative cash flow, look at your expense items and see where you can cut or see how you can rearrange your assets to produce more income.
SUGGESTION: The National Council on Aging provides a service to find programs for individuals ages 55 and over that may help with costs such as health care, utilities, rent, and more. Check out their website at www.benefitscheckup.org.
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