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social security and medicare
pile of money
debt ceiling
financial crisis
whole life
million dollars
social security
3 Reasons I Want Cashflow In Retirement
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3 Reasons I Want Cashflow In Retirement

The way things are going in the US right now, I'm planning on not being able to get much use out of social security and medicare, so I've got some serious planning to do for retirement. Saving is part of the plan, but what's much more important to me is cashflow.

Cashflow means that you'll have a reliable source of cash coming in every month that you can count on. When considering the time when I can finally 'call it quits' and enjoy being old, for me, monthly income is a much better option than just saving and saving my whole life, then withdrawing slowly from that big pile of money.

I want cashflow in retirement, not a pile of money.

There are a couple of reasons for this, and you might agree with me.

1. I don't want the responsibility

Having your life savings in a bank is safe, but do you really want to decide what to do with all that money? Let's say that you have a million dollars in the bank and you're 55 years old. How much can you spend each year? Well, it'll depend on how long you live.

Then you'll have to budget just in case you live longer than expected. But you don't want to be too tight, after all, you should enjoy the time you've spend all these years saving for. Monthly income from a variety of sources means you don't have to worry about your savings - keep it for an emergency or extras, and use the money from your cash-flowing assets to get on with your daily life.

2. I don't trust the banks or the government

I haven't been an 'adult' for that long - just barely ten years now, but all I can remember from recent years is financial crisis. The housing bubble, austerity in Europe, the debt ceiling, the fiscal cliff, sequestration, and who knows what's coming next.

As I said in the beginning of this article, even though I'm paying into social security and medicare, I don't really plan to get much of it back. If it does somehow end up back in my pocket, great, but I can't count on it, and therefore can't include it in my plan.

Without social security, and with the possibility of high inflation in the coming years due to The Fed's current monetary policies (yeah, I'm a bit of a 'boom doom and gloom' type guy), cashflow is going to be the way to go.

3. Multiple sources of income

Saving is fine, but it's only one option. If you save, it's just there, and you take it out when you need it. If something were to happen to it, it's gone. By dividing your money into different cashflowing assets, you're diversifying your savings to prepare for the worst.

Sure, save some money. But also put some in real estate, stocks & bonds, and though not many people choose this asset class, I like to put some into my own business. While owning a business may not seem like an option for everyone, it's fairly easy to start an online business and create the system now that will be able to provide you with money in years to come.

By having monthly income from these three asset classes - real estate, stocks, and a business, if something goes wrong with one, I'll have the support of the other two.

Those are my reasons, and that's my plan. What's your retirement plan?

Street Talk

Great article. I attended a pension planning session once and, guess what, it was targeted for young adults and they discussed many of the things you have. We all need to plan early.

  about 9 years ago

Yes, the earlier you start, the better. Even starting late is better than never starting at all! Planning early, and planning for cashflow is a great way to protect the money you earn now, in spite of changing circumstances in the future.

  about 9 years ago
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