How cashflow modelling can give you confidence in your retirement choices

12 June 2023

At its core, financial planning is all about helping you to reach your life goals. Your wealth is likely to be a means to an end, helping you to achieve all the things you want to do now and in the future.

That might be as simple as a comfortable retirement or helping your children through education or onto the property ladder. Alternatively, you may have more specific goals in mind, such as starting a business, retiring abroad, or leaving a legacy to causes you care about.

Cashflow modelling is one of the key tools we use to help clients to reach their goals. So, what is it, how does it work, and why can it be so transformative for clients? Read on to find out.

Cashflow modelling can forecast your future financial position

Many clients say that their financial goals are “financial independence” or “a comfortable life”, without understanding what that means to them.

The first step is to clarify exactly what you want to achieve now and in the future. You might want to retire early, gift money to a child now to help them to buy a home, or plan for your retirement in the sun.

By using cash flow modelling, we can help you to focus on your future expenses, your life goals, and dream purchases. We can then align these with your current financial plans and take action to make your dreams a reality.

When we use cashflow modelling software, we input variables such as your current income, assets, and expenses, as well as how much you’re saving now. We can then consider your future plans, such as your intended retirement age, any big ticket items you plan to buy, and any gifts you intend to make.

Next, we can add in variables such as inflation, investment returns, and your likely longevity to forecast what your finances will look like in the future.

This process can be hugely powerful, especially if you have only ever made rough assumptions about your wealth or had relatively vague goals such as “financial security”. Cashflow modelling can challenge these assumptions using hard data, and help you make clear, confident decisions that could benefit you.

How cashflow modelling can inform your retirement choices

One of the most common questions clients ask us is: “will I have enough money to live the lifestyle I want when I retire?”

The answer to that question is different for everyone. It depends on a wide range of factors, from what you intend to do in your retirement to your current wealth.

When we have established what you’d like to do in later life, we can work out the likely income or capital you’ll need to achieve these goals – and we can plug these into your cashflow forecast.

This will illustrate whether you’ll likely have enough money to achieve your goals and, if not, what you need to do now.

We can also tweak your plan in real-time to model various “what if?” scenarios. 

For example, we can show you the effect of delaying your retirement for a couple of years, or the future benefits of saving an additional £250 a month now.

We can also plan for a range of different scenarios, including:

Seeing your future in black and white can be genuinely life-changing. Seeing that you could retire now, live the lifestyle you want, and not have to worry about running out of money in later life gives you the confidence to make positive life decisions based on hard data, instead of assumptions.

We have worked with many clients who have been able to tick items off their bucket list and achieve their life goals, safe in the knowledge that they can afford to do so based on their financial forecast.

A perfect blend of technology and expertise 

Of course, a cashflow forecast isn’t a firm confirmation of what your future financial position looks like. Things can change, and it is only ever a forecast.

However, working with a financial planner gives you the best of both worlds – human knowledge and expertise, backed up by cutting-edge technology.

Cashflow modelling is not a replacement for bespoke financial planning – it is a tool we use to help you to make informed decisions based on data, rather than assumptions and hope.

With the information a forecast provides, we can help you to create a robust financial plan that takes many future possibilities into consideration, while answering any questions you may have along the way.

And, of course, we can adapt your forecast and plan as your circumstances change. If ill health means you retire earlier than expected, we can show you the likely medium- and long-term impact of this.

Conversely, if your earnings increase and you can save more, we can show you how you might be able to achieve more of your goals sooner.

Get in touch

If you want to build a robust financial plan based on a personalised cashflow forecast, we can help. Email or call 0161 8080200.

Please note

The Financial Conduct Authority do not regulate cashflow planning.

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