Retirement is not the end of a financial journey. It’s a transformation. For decades, you saved deliberately. Now, the focus shifts to spending deliberately, aligning your money with the life you’ve worked hard to create. At BlueSky Wealth Advisors, we believe managing cash flow in retirement should be empowering, not restrictive. It's about using your money with intention, supporting what matters most to you.
- Budget With Purpose: The 40/40/20 Rule
Tracking every penny can be exhausting and unnecessary. Instead, we encourage a values-based budgeting method that prioritizes what you care about, using a simple 40/40/20 framework:
- 40% – Essential Needs: Housing, utilities, insurance, groceries, healthcare. These core expenses should ideally be covered by predictable income streams such as Social Security, pensions, or annuities.
- 40% – Lifestyle Wants: Travel, dining out, hobbies, time with grandchildren — these are the joys of retirement. Spending here will vary, and that’s okay. Flexibility is part of the plan.
- 20% – Contingency & Giving: This includes emergency savings, large upcoming expenses (like home repairs), healthcare surprises, or charitable giving. Even in retirement, having a savings cushion adds vital flexibility and security.
This structure frees you to spend in a way that reflects your values and supports the lifestyle you’ve envisioned.
- Structure Income Strategically: Use Buckets Wisely
While not every retiree needs a strict “bucket strategy,” organizing income sources by time horizon can bring tremendous clarity:
- Short-Term (0–2 years): Keep this money in cash or high-yield savings accounts. It covers day-to-day needs and provides peace of mind.
- Mid-Term (3–7 years): Income-producing assets like bonds or dividend-paying funds replenish your short-term reserves while offering moderate growth.
- Long-Term (7+ years): Equities or real estate investments designed to outpace inflation and preserve purchasing power over time.
Depending on your financial picture, the exact location of funds might vary, but the principle remains: plan ahead with intention and flexibility.
- Diversify Income Streams for Resilience
At BlueSky, we help clients build a mix of income sources to reduce reliance on any one stream and increase retirement stability:
- Social Security: Timing your claim can significantly impact lifetime benefits. We model scenarios to find your optimal strategy.
- Pensions & Annuities: Guaranteed income may form a helpful baseline, but we ensure it fits your broader tax and liquidity needs.
- Investment Portfolios: A well-allocated portfolio supports systematic withdrawals while adapting to market cycles.
- Real Estate Income: From rental properties to REITs, real estate can provide passive, inflation-resistant income.
- Part-Time Work or Consulting: Many clients find fulfillment in continuing to work on their own terms.
These sources, woven together, offer both security and flexibility, especially when markets are volatile or inflation rises.
- Use Simple Tools to Stay on Track
Budgeting doesn’t have to mean spreadsheets. Whether you prefer a hands-on approach or set-it-and-forget-it automation, here are some smart, simple strategies:
- Tech Solutions:
- Empower – Combines cash flow and investment tracking in one place.
- Monarch Money – Great for household budgeting and shared finances.
- Simplifi by Quicken – Visually intuitive and mobile-friendly.
- Behavioral Techniques:
- Reverse Budgeting – Cover needs first, then enjoy the rest guilt-free.
- Monthly Retirement Paycheck – Set a sustainable monthly withdrawal and live within it.
- Digital Envelope System – Separate accounts for travel, giving, and bills offer built-in limits and clarity.
- Advisor Tools:
- BlueSky clients benefit from integrated dashboards that automatically track spending, performance, and projections—no data entry is needed.
- Review Regularly and Adapt as Life Evolves
Retirement is not static, and your plan shouldn't be either. Annual reviews help keep you on course as needs, markets, and goals shift. During these check-ins, we help you:
- Revisit income and expenses
- Rebalance portfolios and buckets
- Plan for large upcoming costs
- Adjust withdrawal rates or tax strategies
A great plan isn't rigid — it evolves with you.
Final Thought: Align Your Cash Flow With What Matters Most
At BlueSky, we don’t just manage your assets. We help you live the life you imagined. That means aligning your cash flow with your values, your priorities, and your dreams.
We believe in using your money deliberately, not just to maintain your lifestyle, but to fulfill your purpose, whether that’s travel, time with family, making a difference through giving, or leaving a legacy.
Let’s create a retirement income plan that supports what matters most to you.
