Home / Blog / What You Need to Know About Managing Cash Flow in Retirement

What You Need to Know About Managing Cash Flow in Retirement

October 28, 2021 | Aged Care Advice

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

DISCLAIMER: Coastal Advice Group Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

(Trading names of Coastal Advice Group Pty Ltd include Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Compass Advice Port Macquarie, Wealth for Life Financial Planning and Coastal Advice Group Brighton/Somerton Park).

The views expressed in this publication are solely those of the author; they are not reflective or indicative of the Licensee’s position and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

Any advice or information in this publication is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.

Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product, it is important for you to consider these matters and to seek appropriate advice.

Past performance is not a reliable guide to future returns.

Any tax estimates provided by us in this publication are intended as a guide only and are not intended to be a substitute for specialised taxation advice. We are not registered tax agents and you should consult with a registered tax agent to determine your liabilities, obligations or claim entitlements that arise or could arise, under taxation law.

The information in this publication reflects our understanding of existing legislation, proposed legislation, rulings etc as of the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

The publications on this site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.