In real life, retirement cash flow is not as simple as the pundits would have you believe.
Try a typical retirement calculator, and you’ll be prompted for a single expense number: How much would you need to spend from savings to live in retirement each year? But research shows that your gross expenses will change, likely declining as you get older. The assumption of constant retirement withdrawals simply isn’t realistic.
But this post is about the flip side of the retirement balance sheet: For many of us, retirement income will also change over time. As the years go by, we’ll need to take action to ensure regular payments keep coming in, and perhaps adjust our lifestyle if they aren’t enough.
Based on my experience living in retirement, I’m seeing three irreversible stages of retirement income. Once you leave each one behind, you’ll be fully dependent on only what’s left….