Think about it as mapping your income versus your expenses. Simply means the amount of cash you have coming in and going out each month (see chart below). When it comes to managing cash flow in retirement, there are 2 key concepts to understand: cash flow and liquidity. "Although they have the ability to take distributions from their 401(k)s or IRAs, many people don't want to sell off invested assets to pay for unexpected expenses." Balancing act: cash flow vs. "For many retirees, having a cash cushion can help provide peace of mind," says Klara Iskoz, vice president of Fidelity Financial Solutions. Financial priorities often change as well as you move from saving for retirement to generating income from your hard-earned retirement savings. Sources of income can shift, as can expenses. Whatever the size of your nest egg, retirement will likely mean big changes in your financial life. Take advantage of web-based and smartphone technology to manage day-to-day financial transactions easily from anywhere.Consider categorizing your needs as shorter- and longer-term, as a way to manage cash flow.But make sure to have enough liquid assets to cover ongoing expenses. Holding too much cash may mean you miss out on investing opportunities. You need all the time in the markets you can get. If you're starting when your children are older, you have even less time. The time horizon for college is usually short: a maximum of 18 years. Tip: If you're going to contribute to your children's college education, it's wise to start as early as possible. Making a decision to start saving for college today will make it much easier psychologically to invest tomorrow. For example, you might be held back by the fear of the unknown. $1,000 is a great start in one of these plans, and depositing the money in such a plan will help you get the technical details of the account worked out so you can continue to contribute. These plans are sponsored by the states, so be sure to check out your state's 529 college savings plan and see if it makes sense for you.
If you want your kids to go to college, and you aren't rolling in the dough right now, you should probably think about saving for their college education.Ī 529 college savings plan is a great choice, as it has tax advantages that encourage individuals to save for college.
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