Excerpts from the Book – Preserving Wealth – written by Jack Lumsden, MBA, CFP®
The following is an excerpt that describes the difference between saving for retirement and creating a cash flow in retirement.
“The key thing is that once you retire, you’ll want to create a strategy to replace the monthly paycheque you’ve been receiving for the past thirty to forty years with the assets you’ve accumulated over your lifetime. The basics still apply; however, there is a slight change in approach. Do you remember when you were younger and we used to go to Blueberry Hill, climb up the rock cliff, pick the blueberries, and then climb down? Later, you took your own kids.”
“Absolutely, but why to you mentioned that?”
“When you took your own kids, did you let them go ahead of you on the way up to the top of the rock cliff?”
“Yes, we did.”
“And then on the way down, were they allowed to go alone?” asked Uncle Wayne.
“No, we used to hold their little hands when climbing down,” Mark continued.
“Why was that?” asked Uncle Wayne
“Well, on the way up, if they slipped or fell, they’d just fall down a bit, and we were there to pick them up and start again. On the way down, if they slipped or fell, they could tumble to the bottom and really get hurt,” Mark explained.
“This sort of explains the difference between saving for retirement and retiring with the need to generate an income and cash-flow stream from the assets you have accumulated and inherited. The way up the rock cliff is like saving for retirement. If you make a small mistake or slip, you can recover and continue your journey to the top. However, once you reach the top and start the descent, it’s like being retired. If you make a mistake, you have less time to recover. You could tumble to the bottom and get hurt badly.
“Just like when you held your kids’ hands on the way down the rock cliff to protect them, an experienced retirement income advisor can help retirees navigate their income and cash-flow requirements.”
“That’s a great analogy, Uncle Wayne. I can see how it’s important to make sure you have a great plan as you transition to retirement, but what are some of the key risks to retirement income planning that are different than saving for retirement?” Mark asked.
For more information on the retirement income and cash-flow planning you can refer to Chapter 3: Protecting and Preserving your Wealth from the book Preserving Wealth The Next Generation – The definitive guide to protecting, investing and transferring wealth by Jack Lumsden, MBA, CFP®
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