The Retirement Cash Flow Game
By: Peyton Gentry, AIF – Hummel Financial Advisor
The year is off to another up and down start in the financial markets, and those first quarter retirement account statements are starting to roll in. Whether retirement is just a few years away or decades down the road, it’s completely normal to take a look at those numbers and think, “Am I doing enough to prepare for life without a paycheck?” It’s easy to get caught up in the idea that you need to hit some magic savings number to retire “comfortably,” but retirement isn’t all about the size of your nest egg.
Retirement is a cash flow game —making sure you’ve got more money coming in each month than going out. This idea isn’t all that different from managing your finances during your working years, but in retirement, the dynamics shift. Without a steady paycheck from your job, you’ll need a clear plan to ensure your income sources can reliably cover your expenses
Let’s break it down. On one side of the cash flow equation, you’ve got your income—think Social Security, pensions, rental income, or maybe some part-time work. On the other side, you’ve got expenses, which include everything from housing and utilities to healthcare and travel plans. The goal is to align your fixed income (those predictable, steady sources) with your regular expenses. That way, your “extra” savings act as a cushion for both the things you want to do—travel, hobbies, spoiling the grandkids—and for those inevitable unexpected costs
But what if there’s a gap between your fixed income and monthly expenses? That’s where good financial planning before retirement comes into play. Instead of focusing solely on saving more money into retirement accounts, you can explore other strategies to balance the equation, such as the following:
• Delaying Social Security to maximize your benefits
• Paying off debt to lower your monthly expenses
• Allocating a portion of your retirement savings to an income-producing investment
• Contributing to an HSA to help with healthcare expenses if you plan on retiring before you’re eligible for Medicare
These options give you flexibility and control over both sides of the cash flow equation—income and expenses. And here’s the kicker: Time is your greatest advantage. The earlier you start thinking about these decisions, the more options you’ll have down the road. Even if retirement feels like a distant dream, taking stock of your financial situation and laying out a plan now will give you more confidence and flexibility when the time comes. It’s never too early to ask, “What steps can I take today to win the retirement cash flow game?” Future you will be glad you did.
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