Cashflow modelling: A deep dive into how tech can “see your future” and offer peace of mind

In our recent client survey, we asked our not-yet-retired clients about their biggest financial concerns. By far, the two most popular answers were:

• Not having enough money to retire at the age I want
• Being unable to afford my preferred lifestyle in retirement.

We understand that in a time when the cost of living has risen sharply and seems as if it won’t decrease any time soon, affording a comfortable retirement might be on your mind.

• Whilst nobody can wave a magic wand and grant you perfect financial security in your retired years, one important financial planning tool could help you see your circumstances more accurately.

That tool is called “cashflow modelling software”, also known as “cashflow planning” or “forecasting”. Here at PenLife, we use it to show our clients what their money is really capable of.

Continue reading to learn why cashflow modelling could help you plan for retirement and gain peace of mind.

Cashflow modelling software gives data-driven projections of your financial future

Cashflow modelling software is not a crystal ball, but it could give you a glimpse into how your financial future may look (based on a series of assumptions).

This technology considers your:

• Current income and any future windfalls you may expect
• Capital, such as properties you own outright, investments, pensions, cash savings, and business assets
• Regular expenses and any additional expenses you anticipate in future
• Age, marital status, and other personal details
• Regular savings and investments, including pension contributions
• Debt, such as a mortgage or business loans.

It then produces a detailed graph of how your savings and investments might help to fund your retirement, and how much you could afford to spend each year.

Of course, these variables are subject to change, as life doesn’t always go the way we plan.

That’s why cashflow modelling software is so efficient: it can model different scenarios depending on how your life, goals, and financial circumstances shift and change.

For example, a life event like a divorce could alter the direction of your financial plan. You might receive a settlement, meanwhile your monthly income would likely decrease, shifting the way your money is organised and prompting you to make different choices with your wealth.

If this or a similar situation were to occur, we can simply alter the variables within your cashflow model and look at how to achieve your goals with these new aspects in mind.

You could feel more confident in your retirement plans when using cashflow modelling

One important advantage of cashflow forecasting is that it can directly inform your retirement choices.

For instance, when we plug your variables into the cashflow planning software, you could be surprised to learn that you are on track to retire comfortably at an earlier age than you originally thought. You may learn that your savings and investments can keep providing for you over the long-term, giving you peace of mind and letting you retire with confidence.

Or, if you have some ways to go before you can reach your retirement goals, knowing this now could give you the opportunity to save and invest with these goals placed firmly in your mind’s eye. As you inch closer to your retirement date, you can keep checking in with us to ensure you’re on track.

If you often worry about not having enough to retire at the age you want, or are concerned about running out of money when you do retire, this form of planning could put your mind at ease.

Once you know when and how you’ll be able to retire, it’s time to look ahead at your next steps

Beyond finding out when you can comfortably retire and how much you’ll have to live on, cashflow modelling software can also help you take even further steps towards financial prosperity.

For instance, you might wish to help your children onto the property ladder or offer them a gradual inheritance throughout your retirement. Cashflow planning can help to ensure this is affordable and tax-efficient for everyone involved.

Looking ahead at your long-term plans, you might also wish to set money aside to pay for later-life care, and could start looking at the potential Inheritance Tax (IHT) liability on your estate too.

All of this is possible with cashflow planning: a variable, data-driven financial planning tool that challenges your assumptions and helps you create the life you deserve.

An ideal combination of technology and human expertise

As Financial Planners, we use cashflow modelling software to produce data-driven results that our clients can trust.

But we know this is not all you need. In order to retire and pursue other important goals with confidence, you need a professional who can answer your questions and help to implement your plan.

That’s why here at PenLife, we combine technology with human expertise, as we believe this is the perfect blend to help our clients secure their future and gain ultimate peace of mind.

Get in touch

Are you on the road to retirement? We can help you form a robust plan. Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, or tax planning.