pension guidance service

What are the Benefits of Cash Flow Modelling?



Posted on: 24th May 2018

Many of Haven IFA’s clients choose to set aside a proportion of their wealth in cash. This can sometimes simply be because they decide to make a short-term decision when they reach retirement prior to investing their cash reserve in a new property or other investments. Others prefer to retain a greater percentage of wealth in cash and hold onto this for longer periods of time: some investors feel that the risk and volatility of stock market investment is not something they would like to get involved in.

Whatever the reasons behind the decision might be, having an experienced IFA by your side to give informed advice and wise council on cash flow modelling is now more important than ever, especially with interest rates continuing to provide such a poor return on investment. This bespoke cash flow modelling service is something that Haven IFA is proud to offer to their clients.

How Can Cash Flow Modelling Help?

Having a cash flow forecast when you are approaching retirement, can give you a clearer indication about what your future income and capital needs are likely to be in later years. Cash flow modelling is also a useful tool in helping you to make an informed decision about when the best time to take retirement would be.

Cash flow modelling can help you to calculate the difference between what your income is likely to be if you choose to take early retirement, and your income prospective income if you choose to retire later on in life. Armed with this detailed information, you will be able to get a clearer indication of how your future income might be affected by inflation. This information will also give you a much better understanding of what level of income you will be able to take at different rates of investment return.

Benefits of Cash Flow Modelling

It’s important to stress that cash flow modelling is not a process to be carried out once and then forgotten about: cash flow modelling is a living document that can, and should, be revisited on a regular basis. In that way you can be certain that it will always reflect, and be relevant to, your current circumstances should anything change. Even minor changes can make a huge difference in the longer term.

Cash flow modelling can also help you to plan and make the right decisions about your future financial circumstances once you retire: for example, would your financial outlook be best served by downsizing when you retire, and would moving to a smaller property help to release extra capital that you could pass onto your family when you die?

Cash flow modelling can also be a valuable tool in terms of tax planning, enabling you to legally reduce the amount of inheritance tax liability that might otherwise be payable on your estate after death. By mapping out your future cash flow, you will also be in a much better position to plan for other later-life expenditures should be unfortunate enough to need residential or nursing care.

Talk to Haven IFA

Using the Voyant system, Haven IFA are able to offer cash flow modelling advice as part of our financial guidance service. With their experience and know-how, our financial planners will then be able to analyse your financial circumstances in totality and help you to see the potential for your future. To find out more about how we can help you better prepare for retirement, get in touch today.