Will I run out of money?

How cash flow planning can help

When clients come to us for wealth planning advice, they almost always ask ‘Will I run out of money?’ It’s an understandable concern. No-one knows exactly how long they’re going to live or what financial challenges they may face.

Cash flow modelling can help to alleviate concerns. It’s the process of assessing your current and forecasted wealth, along with your income and expenditure, using assumed rates of growth, inflation and interest rates, to build a picture of your finances now and in the future.

If you have accumulated wealth, cash flow modelling can help you manage your position and make sensible decisions over the years. However, it’s arguably even more beneficial if you have longer-term objectives, as you can see how much you need to save and the returns you need to meet those objectives. You can also use it for care fees planning.

How does it work?

We start by asking you about your current financial situation, including outgoings and income, and establish an overview of your assets, including your property. Once we have a clear picture of your existing and future financial commitments and ambitions, we can create your lifetime cash flow plan, which should enable you to:

  • Produce a clear and detailed summary of your financial arrangements
  • Work towards achieving and maintaining financial independence
  • Ensure you’ve made adequate provision for the financial consequences of death or disablement
  • Plan to minimise your tax liabilities
  • Produce an analysis of your personal income and expenditure
  • Estimate your future cash flow
  • Develop an investment strategy for your capital and surplus income
  • Become aware of inheritance tax issues that could affect
  • your beneficiaries.