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NRG's Golden Rules for Retirement Cash Flow Success

NRG's Golden Rules for Retirement Cash Flow Success

May 09, 2019

It’s been a beautiful spring in Southern Arizona; the desert is alive with brilliant colors and the weather is such that we can enjoy the natural beauty all around us.  However, it seems that in the heat and humidity of August, I forget how wonderful it is to live in the Sonoran Desert in the spring & winter. 

This is reminiscent of a big part of my job keeping clients financially on track.  It’s easy to forget our long-term goals when the mind moves through our personal seasons and we are ready for a “change.”  Whether it be a complete course correction or a longing for how things were in the “spring,” straying off course can happen to anyone, especially for those who don’t have a clear system in place to help stay on track.

A few years ago, I met  a couple in retirement who were struggling with cash flow management.  I was inspired to write what I coined “NRG's Golden Rules for Retirement Cash Flow Success.”  It was so clear in my mind the importance of these four rules and just how vital they are to retirement success.  


  1. Embrace your true expenses and spendable income.

What does this mean?  It means you need to be honest.  Unless you are excited about the idea of continuing to work in your retirement or spending your kid’s inheritance to zero, you are working with a fixed income.  That’s okay.  Financial freedom doesn’t necessarily depend on an unlimited amount of money.  What it can mean is the ability to understand what you have to work with and making choices based on that knowledge.  And choices can give you a sense of freedom.  


  1. Track and prioritize expenses monthly.

I believe wholeheartedly that what gets tracked gets done.  At my annual medical checkup last fall my doctor told me I had two choices.  We both knew I was 30 pounds overweight and about to turn 50 when she said, “Well, you’re borderline this and almost that.  Technically I could prescribe you cholesterol medication now and next year a low dose blood pressure drug.  Or, you can drop the weight, eat healthy and exercise so I don’t have to prescribe either!”  I chose the latter.  So far, I’ve dropped 25 pounds by tracking my food intake and exercise.  Tracking works in personal finance as well as it does in personal health! 

In your personal finance world, what will get done is a sense of control over where your retirement income is being spent.  And just like with our first golden rule, knowing where your money is going and knowing that you made that choice with purpose can be very liberating. Knowing where your money is going gives you actionable insight into your spending habits, which in turn gives you the ability to make changes where needed.  Having a cash flow plan comes in handy when those unexpected “but I deserve it” moments creep into our lives. 


  1. Accept that investments are not a slush fund and that borrowing in retirement is economic quicksand.

This may sound harsh, I mean, it is your money we’re talking about here.  But we also have to remember the purpose for which your portfolio should have been created.  Retirement portfolios are usually created for some combination of these three things: 1) provide a stream of retirement income that increases with inflation, 2) keep principal intact for future unknown needs (think long-term care), and 3) leave funds for others after your death (inheritance and charitable gifts).  The basis (how much, when & where) of these three things should be documented in a detailed financial plan and revisited often to be sure goals are being met. 

For those of you who work with NRG, you may have heard us talk about “Jack’s comfortable rates of withdrawal.”  These rates of withdrawal have been carefully added to your plan, giving us a degree of confidence that the retirement you planned happens as you planned it!  I like to say “a well-developed portfolio is like a well-tuned car engine.  If you’re driving down the road and find yourself needing some extra cash, you usually don’t pull over and sell different parts off your engine to make ends meet.  You won’t be driving down the road much longer!”  Your own personal rates of withdrawal were put in place to achieve your long-term goals.    

In my book, Cash Out! Retire on Your Terms, Live Well and Die Happy I wrote about the dangers of borrowing in retirement.  Take for example a retired couple who plans to live on a specific amount each year.  Their monthly expenses get ahead of them, so they borrow money (credit cards, home equity loans, etc.)  Now they have to subtract the cost of the loan repayment from their original specified amount.  If they couldn’t get by on the specified amount, is it reasonable to expect they can live on less?  This, my friends, is economic quicksand. 


  1. Align your expectations with your financial reality.

This is the “Core Truth.”  It could easily be listed as the only golden rule of cash flow management.  Or, at the least, it could be listed as the first and most important of the four rules.  However, as easy as it would be to follow just one rule instead of four, you can’t get to this rule without faithfully executing the first three.  It’s as simple as that.

There are two keys to success with this rule.  The first is accepting the difference between a need and a want.  To live you NEED food, shelter and clothing.  Those can be purchased for very little in today’s society.  To thrive you need love, community and a purpose.  Those can’t be purchased with money.  Everything else is a want.

The second is to be ever alert to any thought that starts like this:  I/we/family member deserve(s)

The universe of personal finance does not agree with any thought that begins with those two words.  The universe of personal finance does not agree that you deserve a vacation, an RV, a time share, a new car, or an oversized home with a guest bedroom that will rarely ever be used for anything besides storing all the other items you convinced yourself you deserve but never use anymore.  Contentment cannot be purchased monetarily.  Stop trying.


So, when the summer heat has got you down and you long to escape the place that so recently graced us with its spring charm, remember your goals.  Stay clear about what is important to you and how you want to live your retirement.  You should know these rules are just as important for those who can easily afford to spend/give more as they are for those who got out a little over their skis.  I’ve seen it both ways, equally.  For some, the change in mindset can uncover perceived limitations and open the door to infinite possibilities that may just help to enhance your quality of life.   




Navigation Retirement Group is a registered investment advisor. Navigation Retirement Group and its representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities product, service, or investment strategy.  Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, or attorney before implementing any strategy or recommendation discussed herein.


About Jack

Jack Davis is the founder and CEO of Navigation Retirement Group, an independent wealth management firm serving high achieving retirees and pre-retirees with investable assets between one and ten million dollars. For nearly three decades, he has been using his asset management and financial planning skills to develop and implement planning strategies that help pursue his clients’ unique goals. Passionate about education, he holds a Masters in Personal Finance and the CERTIFIED FINANCIAL PLANNER™ credential. He is also the author of Cash Out! Retire on Your Terms, Live Well and Die Happy, a book that gives pre-retirees and retirees planning tools and insights that can help them flourish throughout retirement. Based in Oro Valley, he and his team serve clients throughout the greater Tucson area and around the country. Learn more by connecting with Jack on LinkedIn or visiting