Last blog we addressed a few points of the rather expansive topic of how to secure cash flow with retirement planning, focusing mainly on strategies during your working years, when it matters most. So what happens after work, and after that steady salary you’ve always counted on ceases? We’re looking at a few important points to ensure that your cash flow will maintain through your retirement.
Budget—Here’s a common question I get: “When I retire will my expenses change?” It’s a serious question that needs to be reflected in your budgeting practices. This very personal question has a range of answers, depending on who is asking. Some may see a reduction in expenses, but by and large, most of my clients see their spending levels maintain or even grow during that first period of retirement, due to added leisure time and a desire to make the most of their freedom. That being said, your expenses will likely change as retirement goes on, meaning that reviewing expenses and adjusting your budget regularly becomes more important in retirement.
Taxes—Ouch. While there isn’t really a way to avoid them entirely, a tax strategy can do a huge amount to ensure that your cash flow isn’t excessively diverted into the government coffers. I’ve seen the difference between a poor tax strategy and a tax-efficient strategy exceed 20%—that’s one out of every five dollars! In general, we want to make sure to maximize the assets that are in retirement accounts, which are taxed at the normal amount, and minimize other types of investments, which are taxed at the higher capital gains level.
Estate Planning—For most retirees, what happens to that cash flow after they pass is just as important—if not more—than securing it for themselves. As such, estate planning becomes a crucial part of the picture. For most, it’s an aspect of retirement that requires just as detailed a plan, and is certainly not to be left to assumptions. It’s crucial to allow a professional to look things over and alert you to any areas that need attention. Furthermore, regular review is absolutely necessary, especially if large financial changes happen. Do everything you need to ensure that your estate plan is up to date.
Whether before or after you retire, retirement planning is the cornerstone to securing your cash flow. Having a road map on paper will ensure that emergencies don’t upset your finances, and that your assets will maintain even on to your beneficiaries. Miramontes Capital has helped hundreds of clients do just that. If you’ve got questions for any part of the process, let us take a look with you. Give us a call today.