You may have heard the saying, “cash is king." When it comes to retirement and figuring out how to live comfortably in your later years, the amount of “cash” or “assets” you’ve accumulated is actually not the most important factor. Rather, one of the most important issues you must address is how to convert your cash and assets into cash flow that is consistent and increases over time to adjust for inflation. After all, a loaf of bread is not going to cost the same 10 years down the road as it does today.
Now that we have established the importance of cash flow, there is a flip side to cash flow that must also be considered. I am referring to what I call “tax flow." It comes down to how much you’ll have available to spend at the end of the day, after taxes. Managing tax flow is almost as important as knowing how to create cash flow!