How to plan your retirement cash flow for financial security

DETERMINING your income needs is essential to a financially secure retirement. Underestimating your expenses could lead to cash flow shortfalls, while overestimating could unnecessarily limit your lifestyle.

- ALEX ODENDAAL

Establish a realistic baseline: while general guidelines suggest your retirement income should be between 70% and 80% of your pre-retirement earnings, be aware that individual factors such as debt, savings rates, and insurance costs can significantly influence this figure. Carefully analyse your current spending habits and desired lifestyle to create a practical budget for retirement. Deduct current investment contributions: upon retirement, you'll transition from contributing to your investments to drawing from them. With this in mind, remember to exclude your current retirement contributions from your projected retirement expenses. This adjustment can substantially affect your retirement budget, especially if you start investing later in life. Eliminate debt obligations: ideally, aim to be debt-free by retirement. Home loans, vehicle payments, and credit card repayments should ideally be settled to reduce financial pressure. Develop a debt reduction strategy that is tax-efficient yet preserves sufficient discretionary funds to comfortably meet your retirement expenses.

Review and revise your insurance coverage: