Cash Flow Planning When You’re Thinking About Retirement

Cash Flow Planning When You’re Thinking About Retirement

The years leading up to retirement are some of the most important, and often the most challenging, when it comes to financial planning. You’re still working and likely earning your peak income, but your mind is starting to shift toward what’s next. Retirement means big changes: in your lifestyle, your daily routine, and especially how you generate income.

You may be dreaming about travel, giving back to causes you care about, spending more time with family, or finally having the flexibility to pursue interests you’ve put on hold. But before you can fully enjoy that next chapter, it’s critical to have a clear understanding of how your income and expenses will shift, and how to make your money last.

That’s where cash flow planning comes in.

Why Cash Flow Planning Matters More Now

Most people think of budgeting as watching what you spend today. But cash flow planning takes a wider view. It looks at your income and expenses over time, helping you balance today’s lifestyle with tomorrow’s goals.

In your final working years, cash flow planning helps you take advantage of your higher income to build flexibility into your retirement plan. It can help guide decisions about when to retire, how to shift income sources, and how to use tools like Roth conversions, debt payoff, or portfolio adjustments to your advantage.

Ultimately, it’s about building a plan that’s both sustainable and adaptable.

Step One: Know What’s Coming In

Start by listing all sources of net income, what actually hits your bank account after taxes. This might include:

• Salary or self-employment income

• Rental income

• Pension or Social Security estimates

• Any consistent investment income

Step Two: Understand What’s Going Out

Categorize your expenses to get a full picture:

• Fixed obligations: Mortgage, rent, car payments, student loans, credit cards

• Basic living expenses: Utilities, groceries, gas, insurance premiums

• Discretionary: Travel, dining out, hobbies, entertainment

• Savings contributions: Retirement accounts, emergency fund, college savings, etc.

• Irregular or one-time expenses: Car repairs, medical bills, home maintenance (look at a 3-year average to estimate)

Step Three: Clarify Your Goals

What are you working toward? That might include:

• Increasing your retirement savings while you still can

• Paying off a mortgage before retirement

• Helping grandkids with education

• Starting a business or taking a sabbatical

• Renovating or downsizing your home

• Building in flexibility to work part-time or consult

These goals will help shape how you prioritize your cash flow in the years ahead.

Cash Flow Planning in Action

This isn’t just about tracking dollars, it’s about creating a strategy. When done right, cash flow planning can highlight gaps or opportunities, such as:

• Are you taking the right amount of investment risk given your timeline?

• Should you prioritize paying down debt now to lower expenses later?

• Are you using tax-advantaged savings tools to the fullest?

• Would adding another income stream or diversifying your portfolio help?

• Are your income sources structured in a tax-efficient way for retirement?

The goal is to align your money with your values, create flexibility, and build a plan that adapts as life evolves.

The Bottom Line

As retirement gets closer, the way you manage your cash flow becomes even more important. It’s not just about spending less, it’s about spending intentionally and making the most of your peak earning years. The right plan gives you clarity and control, so when the time comes to step away from full-time work, you do it on your terms.

If you're not sure where to start or want to check if you're on track, let's connect and put together a plan that fits where you are now, and where you want to go.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA