What You Need to Know About Managing Cash Flow in Retirement

Every single person has a different idea of how they want their retirement to be. Some dream of days of traveling to different places and catching up with old friends. Others want to spend it giving back to their community. Most want to enjoy it with their loved ones living a comfortable life.

No matter what your retirement goals are, one thing is for sure – you need to be financially stable to reach those goals.

In this post, Coastal Advice Post Macquarie, your trusted financial adviser in Port Macquarie, shares information on how you can reduce financial stress and manage your cash flow in retirement:

What Is Cash Flow Management?

First of all, you need to understand what cash flow management is. Somewhat similar to business cash flow, personal management of cash flow is a process that helps you determine how much income you receive compared to your expenses. By understanding that, you can consider allocating surplus funds to your other financial goals. If you find that there’s no extra, you can reassess your expenses to see where you can make adjustments.

As you can guess, the more you earn, and the less you spend, the higher your surplus is. That means you can achieve your financial goals sooner. This is not a new concept and certainly not unique to retirement as it can be applied at any life stage. That said, it will be more critical when you are at that stage where you are no longer earning a regular salary.

Take a Closer Look at Your Spending Habits

While you’re still a few years away from your retirement, it’s time to think about how you are spending your hard-earned money and how that might have to change in the future. Simply put, what kind of lifestyle would you like to have in your retirement?

• How often do you want to travel?
• How often will you eat out?
• Will you buy a vehicle or a new house?
• Will you be spending money on your loved ones?

These are just some of the questions that you need to ask yourself. Depending on your answer, you can then calculate and better estimate your cash flow expectations.

Create Annual Plans

Once you have determined your expected expenses, you can start creating annual plans. You may break down the year into months or quarters so it will be easier to highlight the recurring expenses you have like utility bills, insurance premiums, groceries, and others. As soon as you have that sorted out, you can add costs for activities you’d do a few times a year or even just once a year, like traveling abroad or making a significant purchase.

Deal with Your Debt

While you are still working, it’s possible that you are not feeling as pressured about your personal debt. It may be because you have a regular salary that you use to pay off your loan, mortgage, credit card, and others. However, you won’t have the same resources when you’re retired, so you should make it a point to pay off all your debt before you retire. By doing so, you’re putting yourself in an advantageous position for improving your regular cash flow surplus.

Managing your retirement cash flow takes thoughtful planning and being transparent with all your financial transactions. Before you reach retirement, you should practice living on just your retirement budget. Do this for six months to a year so you’ll have an idea of how it would be. Of course, you can seek the help of a reliable financial adviser in Port Macquarie.

Coastal Advice Group is where you’ll find a trustworthy financial planner who can help you plan and strategise better for your retirement. Contact us today to find out how we can help you!