Thoughts on Retirement Cash Flow

By Alan Silverstein, Fort Collins, Colorado. Email me at
Last update: August 22, 2016

This webpage offers some considerations and suggestions about generating cash flow (spending money) in retirement, at least in the United States. It can be useful for deciding when to retire, and how to optimize resources in retirement.


The Main Question:

"How best should I generate cash flow during retirement, from my investments and assets?"

(Couples, substitute "we" for "I", and "our" for "my", throughout this document.)

Note that people measure "wealth" ambiguously as income, assets, or some combination of each. Some high-income people are "rich" despite having a negative net worth, while some zero-income people are "rich" because of having high assets.

Anyway this main question expands into a series of more detailed questions:

Plus many footnotes in a separate webpage.

How much do I need annually to live on, at least today?

What sources of perennial income do I have?

(By "perennial" I mean ongoing indefinitely, perhaps for life.)

These income streams reduce your net cash flow (spending) needs:

Deduct your expected income streams from your annual spending needs. If income exceeds spending and the situation looks stable, game over! You shouldn't have to touch your assets at all, unless you spend more for some reason (either fun or necessity).

However if like most retired people you must dip into your investments to generate cash flow, you can use any perennial income streams to modify (reduce) the ratio described below, from what it would be without the extra income.

What's my current net worth?

What's the ratio? (annual net spending divided by net worth)

How should I tap into my assets?

First some general thoughts about living off your savings:

So the fuller question here is: What's the best way to spend down my assets, periodically over the rest of my life, to cover my spending needs remaining after all new income?

(This question is the meat of the matter, and it was my motivation for creating this webpage as I figure out the answer for myself.)

Lots of articles are available online about retirement spending models, such as:

However you decide each year, "I need $X to spend this year," consider tax efficiency:

In addition to tax efficiency, also consider:

That's it! See footnotes for some links to websites and books on related topics.