The Cash Flow Clock: For Retirees - Book - Page 103
The Cash Flow Clock
Spending
We have talked a lot about how the Cash Flow Clock
can help figure out the timing of our income needs.
But we have yet to discuss what determines those
needs – our spending.
When we are still working, our spending is
determined in large part by our earned income. At
this time in our life, it is critical that we save enough
for the future, no matter what our income may be. As
one of our clients said many years ago – “It’s not the
size of the stream, it’s the size of the dam”. We must
pool our assets so that they can grow for the future
instead of letting them drift downstream. But in
retirement, things get a bit more complicated.
Much of retirement planning is focused on
accumulating enough assets to reach our “number”,
i.e., how much we need to have saved to feel
comfortable retiring. It is much more important,
however, to understand how to calculate our number
in the first place.
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