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A common definition of savings is the trading current consumption for greater future consumption. If the future target date is after the end of your life, the same principle applies. It just that heirs will be the ones doing the future consuming.

There is no right or wrong answer in making this trade-off between cash flow supporting your life or saving supporting your heirs, but the big mistake is failing to address it intentionally.  Actively defining a philosophy on this question will guide many retirement issues. Here are some examples.


Currently, annuities are offering a guaranteed return of around six percent, depending on the terms of the contract. The trade-off for this excellent cash flow is the loss of the principle to the annuity company upon death. For individuals focused on safe cash flow supporting their life, this may be a sensible approach. However, it removes money from an estate.

Social Security

The commencement date of social security can be selected to either maximize total receipt from the government or to provide immediate guaranteed income for current cash flow.

Paying off a Mortgage

If a pre-retiree cannot fully pay the house before retirement, a current cash flow emphasis would guide towards not pre-paying principle, while an inheritance maximization perspective would guide to at least some pre-payment. The prepayment is effectively an investment at the current mortgage interest rate.

Portfolio Allocation

The primary driver in portfolio allocation is when the asset will be used. If the wealth is intended for future generations, the portfolio will lean more heavily toward equities. If the goal is to follow the famous bumper sticker and spend the kid’s inheritance, an allocation will be leaner in stocks.


The philosophical view of current cash flow verse inheritance is only one dimension of developing a retirement plan, but it is a critical one. By intentionally defining this dimension and other critical factors, retirees can create a plan that meets their goals. The choice of not defining a philosophy leads to an accidental result.

While we can help in implementing the right plan, the retiree must define the goals. Please visit our page for more information or contact us for an appointment.