What is the difference between Saving for Retirement and Creating a Cash-flow for Retirement?

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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This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.

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