Mr. Money sits on your shoulder, raising anxiety by nagging you with a nettlesome thought, "You do know that on the day that you stop working, your cash flow from working stops!!!"

Full retirement means many things. For breadwinners, like a cartoon devil, Mr. Money sits on your shoulder, raising anxiety by nagging you with a nettlesome thought, “You do know that on the day that you stop working, your cash flow from working stops!!!”

No matter how much money you have or don’t have, that’s an unsettling realization. You are accustomed to a predictable paycheck, whether you work for a company or entity or are a business owner or professional. You have been adding to retirement savings, but that also stops. Instead of income you face outgo, changing the dynamic. You wonder, “Where’s my ‘paycheck’ coming from after I retire?”

Such concerns are not always correlated with the amount of money one has. Millionaires worry as much as those with lesser means. It is more of function of “not knowing” in a world of complex variables that vexes a person or couple.

Money questions add to other ponderings. What does retirement mean in terms of fulfillment? If my job or career was my life, what now? It isn’t just about a job; it may be about one’s role. A parent whose major focus was the raising of children, when the kids finally leave home, a mom, for example, can feel she has been “retired” from a role that gave meaning and purpose. That is why some turn to spiritual and charitable pursuits as responsible stewardship is ingrained in human DNA.

You may wonder how much you can spend on your bucket list, recognizing that money spent will not produce income and cash flow. Retirement has three phases—go-go, slow-go, and no-go. How do health care concerns play into those cycles? Where will the money come from?

To avoid analysis paralysis, follow this simple money map. How much does it cost you to live at the base level, nothing fancy, but doing okay? Then add in what you want as a margin for fun things like travel and entertainment. That is your desired budget in today’s dollars.

From your monthly budget, deduct inflows from Social Security, pensions, annuities, or other predictable sources. The result is the cash flow your portfolio must produce.

From your total financial asset base (personal accounts plus retirement accounts), deduct gifts and other giveaways, money spent early in retirement on bucket list wishes such as a second home, mobile home, big trip, etc. The result is the net asset base available to generate cash flows.

Divide the cash flow your portfolio must produce by your net financial asset base. Is that number bigger than 4 percent annually? If so, that requires considerable thought and conversation with your advisor.

To produce $40,000 per year in cash flow from your portfolio, $3,333 per month, at 4% requires $1,000,000 in capital. No wonder millionaires are nervous! If you spend 4% of your principal per year and add 2% to cover inflation, you have to generate a 6% return. Adjusted for taxes at a 25% average (not marginal) tax bracket, your annual gross before tax rate of return (ROR) target becomes 8%. That’s impossible with complete safety in an inflationary and taxable world of ultra-low interest rates.

You need some safe, albeit low interest return cushions in reserve to provide for emergencies and one-off needs. A “paycheck fund” is advised—three to five years of monthly cash flows in a guaranteed (FDIC) account and perhaps a secondary reserve in a low risk bond strategy that recognizes the threat of rising interest rates. Low interest safety reserves mean a bigger load on stock and alternative investment portfolios that target your rate of return (ROR). An advisor can help to frame what is possible and what make sense.

Recognize that with conversations about risk, what allows you to sleep peacefully, potential financial challenges going forward include health status, longevity expectations, the realities of asset allocation and diversification, etc. The goal is a life transition and investment policy that goes beyond money, realistically looking at your life and concerns for family and loved ones.

The antidote for worry and uncertainty is information and counsel that makes for prudent decisions. And at the end of the day, a glass of wine and perhaps a walk in the setting sunshine!

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com