Will You Run Out? Income and cashflow in retirement

January 5, 2024

Will you run out of money when you retire? Imagine you’ve worked all your life to save for retirement, but then you get to your late 70s and the money runs, and you’re left living on state pension only.

Today I want to run through how to avoid that, at all costs.

The point of the Cashflow Ladder is to try to minimise damage from having to sell assets – investments and pension funds in this case – while they are distressed, that is, down in value.

Money you’ll need in the next two years is held in cash.

Money you’re going to need in 3-5 years from now is invested a notch down from your ordinary risk profile – I call that Risk Minus.

Money you’re not going to need for between 6 and 10 years is invested according to your risk profiles.

And finally, money you know you’re not going to need for at least ten years, can be pushed a bit harder, and invested a notch above your normal risk profile.

This will need to be reviewed regularly and as your spending needs change, but that’s the basic principle.