First Person: Creating More Cash Flow in Retirement

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Instead of thinking of all the ways I can stretch my retirement income when I'm older, I've been working on a plan to reduce my expenses so I won't need as much income. I don't plan to retire for another 25 to 30 years. By eliminating debt as soon as possible, I'll have more time to save. But I won't have to depend on my retirement investments and savings as much if I have fewer bills and expenses. Creating more cash flow in retirement, for me, starts with the decisions I'm making today.

Eliminating mortgage debt

One of the largest expenses I anticipate having in retirement is my mortgage or rent. My husband and I plan to retire in place by staying in our current home when we are older. We bought a contemporary 1-story Florida home so we won't have to worry about climbing stairs when we are older. Our goal is to pay off our mortgage within the next 10 years so we have 15 to 20 years to save. We put aside some of our mortgage savings for future home repairs and renovations.

Paying for a car with cash

People who have a car payment during retirement don't have as much cash flow. Most of the cars I'd want to purchase would require a car payment of $400 to $500 a month. While that's not a lot of money to us while we are both working, $500 would be a financial burden to us when we are retired. We are working to save money into a car savings account so we can purchase our cars with cash in our 50s and beyond.

Picking dividend-paying funds

Although a lot of people worry about whether the government will raise the taxes on dividends, I know I can't do anything about it. I rather have to worry about paying more in taxes than being broke. We are picking only dividend-paying exchange traded funds and individual stocks for our retirement portfolios. Since individual companies can decided to stop paying dividends, I favor the exchange traded and mutual funds.

Keeping our credit card balance at zero

By keeping our credit card balance at zero, we will not have to be bogged down by debt. According to an article by, three out of five middle-class retirees will exhaust their retirement money if they don't reduce their spending by almost one quarter. I rather put aside the money I used to spend on paying high-interest credit cards for retirement so that I don't have to curb spending when I'm older.

If I can retire with zero debt of any kind, I'll be able to make it with a combination of retirement accounts and social security. Even though experts say most people should plan to live on 80 percent of their preretirement income, I want to have 100 percent of preretirement income as well as fewer expenses. By eliminating debt prior to retirement, I'll enjoy a boost to my current lifestyle.

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