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Retirement Cash Flow Planning

Retirement Cash Flow Planning

You will not spend all your life working; you will have to retire. Regardless of the reason behind your retirement, keeping a certain level of cash flow will be very useful in retirement plans.

Transitioning from regular income to reliance on investment and other income sources can be challenging in maintaining your normal lifestyle. As a result, proper retirement cash flow planning will be very important to achieving your retirement lifestyle goals.

This article will highlight 6 important steps in retirement cash flow planning.

What Are the 6 Steps in Retirement Cash Flow Planning?

1. Know your retirement age

When are you planning to retire from your regular work? The retirement age normally varies depending on personal considerations; some retire as early as 55 years, while others go beyond 60 years. Understanding your retirement age is very critical in planning your saving and investment strategies.

Remember, beyond your retirement; the regular income will stop or decline; hence you will start depending on your investments or savings.

2. Plan your retirement cash flow early

Do you know time is the best solution to most of the problems? Planning for your retirement as early as now gives you the adage of compounding your cash flow based on your goals.

If you ever start your retirement cash flow planning late, you will compromise on your retirement goals while putting strain on your family lifestyle.

Most people in their 20s who have only recently begun working may believe that retirement is a long way off. For some, planning for retirement at such a young age may appear excessive caution.

However, you must recognize that being young offers you a luxury that not everyone has: ‘time.’ “The early bird gets the worm,” as the saying goes.

Investing early in life will allow you to build up the necessary reservoir without putting too much pressure on yourself.

If you don’t have a cash flow plan, it’s time to consider having one done.

3. Understand your retirement expenses

How can you tell if your investments and assets can meet your retirement cash flow needs without checking your retirement expenses?

As early as now, you can project your retirement needs to help save and invest enough to avoid retirement cash flow problems.

Take a worksheet and lay down all your projected expenses while updating the list as new desires arise.

4. Estimate the future value of your saving

When you retire, you will need to channel your savings to service your expenses. As a result, once you decide on your expected monthly or yearly saving amount, you will have to find its value when you retire.

Understand the expected rate of return on your investment and carry out your calculations carefully.

5. Include other sources of income

You will also need to estimate the CPP (Canada Pension Plan) and OAS (Old Age Security) benefit amounts you would be eligible to receive at retirement as these will positively impact your retirement cash flow

6. Review your retirement cash flow plan regularly.

Your retirement plan should be reviewed regularly (at minimum once a year) to ensure that you are on track to accomplish your goals. Any adjustments in earnings, expenses, retirement age, and so on must be factored into the retirement strategy.

Also, check to see if your retirement plan fulfils your financial goals considering the current market conditions.


If you are within 10 years of retirement, then retirement cash flow planning should be a part of your overall financial plan because this is how you will derive your lifestyle. 

The quality of that lifestyle will very depend on the actions taken well before that retirement date. 


About Me

Joy A. Adams is the CEO of Covenant Wealth Financial. She is a Certified Cash Flow Specialist and a Group Benefits Advisor with over 20 years of experience in the financial services industry.

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