What's Your Cash Flow Plan?
By: David Smyth, June 12, 2020
So, you're finally planning on leaving the daily grind and putting your working days behind you - or are you..? As work-from-home orders continue in many professions, I'm hearing from more and more clients who were determined to retire on July 1, or December 31, who are now thinking they may not be completely out the door and done. Many are reporting enjoying their work more now that they don't have to get dressed up and commute, or deal with certain coworkers and office politics. Some are reporting better sleep and enjoying walking to the neighborhood "bar" by simply walking from the home office to the kitchen.
It will be interesting to see how things play out in the coming weeks as employers' paycheck protection program (PPP) loans expire and more layoffs could follow. But if your job is secure and you're enjoying working from home, it might be a good time to revisit some of your plans.
My advice: Ask yourself, does your retirement plan work? People usually pick a random date to retire and everything then circles around that date. In my practice, when working with those folks who are planning to leave work soon, we don't call it a retirement plan. People don't want to think of themselves as old.
We call it a cash flow plan. The focus is on current assets and whether that's enough to replicate your paycheck. If so, great - you can choose when you want to stop working for your current employer. If not, then you'll simply have to keep working until your assets are enough to hit that number. Notice I didn't use the words "retire" or "quit" - no one wants to be an old quitter! Plus, age doesn't really matter in this equation. You might be 35 and have enough, or 75 and finally hitting that target number. Either way, once you're financially free, you can make the choice of how you'll spend and invest your time for the years to come.
I often think that so many things in our society are age-based. There's a minimum age for pensions, Social Security, Medicare, and your discount at Denny's. Our society loves to measure things and put everyone in the right box. But what I see from my perch is that people who like to work just like to work. They'll continue in their chosen profession until someone pulls out the age card and says it's time to go. Some people will work until a certain number and then they're done. Others get to that number and decide to pursue a lifelong dream. I knew a corporate executive who started cutting hair, and an engineer who started a pool business. He loved being an expert and working with chemicals. Another client left a high-powered sales job and opened a coffee shop. She simply wanted to make people smile and interact with others every day.
Whatever path you choose, I recommend thinking about three things before making any major changes. First, look at your cash flow. Second, consider your benefits and your age. Third, list out what you're planning to do in the first 90 days of retirement.
It's easy to leave work and suddenly every day is Saturday. But then you wake up one day to find that all your friends have died, old age has set in, and the highlight of your week is going to the doctor. I see this happen folks. It's a slippery slope. But the good news is, it doesn't have to be that way.
Our team will be happy to sit down with you and make sure your cash flow plan is up-to-date, and go over what different scenarios will look like based on your goals. And if we don't currently have a relationship with you, call us in advance of your plans to leave work so we can help you address any issues now. We'll help you max out your cash and minimize the everyday mistakes we see people make when preparing to move on.