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How to Create a Personal Financial Statement in Retirement Thumbnail

How to Create a Personal Financial Statement in Retirement

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As you enter retirement, assessing your financial situation becomes more important than ever. Creating a personal financial statement (PFS) is a crucial step in understanding your current financial standing and planning for a secure future. A PFS provides a comprehensive overview of your assets, liabilities, income, and expenses, allowing you to make informed decisions about your finances.

In this guide, we'll walk you through the process of creating a personal financial statement tailored to retirees. We'll discuss what to include, what to exclude, and how to use your PFS to achieve your financial goals in retirement.


  • A personal financial statement is a crucial tool for assessing your financial situation in retirement.
  • The three main components of a PFS are the balance sheet, income statement, and cash flow statement.
  • Include all assets, liabilities, income, and expenses in your PFS, but exclude business-related items and rented assets.
  • Use your PFS to set financial goals, monitor your progress, and collaborate with financial professionals.
  • Update your personal financial statement regularly to ensure you stay on track with your retirement financial plan.


Creating a personal financial statement is essential for retirees for several reasons:

Understanding your net worth: A PFS helps you determine your net worth by subtracting your liabilities from your assets. This snapshot of your financial position enables you to assess your financial health and make necessary adjustments.

  1. Setting financial goals: By clearly outlining your assets, liabilities, income, and expenses, a PFS helps you set realistic financial goals for your retirement years.
  2. Making informed decisions: With a clear understanding of your financial situation, you can make informed decisions about investments, spending, and estate planning.
  3. Communicating with financial professionals: A well-prepared PFS allows you to effectively communicate your financial situation to financial advisors, accountants, or attorneys who can help you optimize your retirement plan.


A comprehensive personal financial statement consists of three main components:

  1. Balance Sheet: The balance sheet lists your assets and liabilities, providing a snapshot of your net worth at a specific point in time.
  2. Income Statement: The income statement details your sources of income and expenses over a given period, typically a year.
  3. Cash Flow Statement: The cash flow statement tracks the inflow and outflow of cash, helping you understand your spending patterns and identify areas for improvement.

Let's take a closer look at each component:


The balance sheet is the foundation of your personal financial statement. It consists of two main categories: assets and liabilities.

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Assets are items of value that you own, such as:

  • Cash and cash equivalents (savings accounts, checking accounts, money market funds)
  • Investments (stocks, bonds, mutual funds, retirement accounts)
  • Real estate (primary residence, rental properties, vacation homes)
  • Personal property (vehicles, jewelry, art, collectibles)
  • Business interests (ownership in private companies, partnerships)

When listing your assets, use their current market value rather than the purchase price. For example, if you bought a house for $300,000 and its current market value is $400,000, list the asset as $400,000.


Liabilities are your debts and obligations, such as:

  • Mortgages
  • Auto loans
  • Student loans
  • Credit card balances
  • Personal loans
  • Taxes owed

List your liabilities with the outstanding balances as of the date of your personal financial statement.

Calculating Net Worth

To calculate your net worth, subtract your total liabilities from your total assets:

Net Worth = Total Assets - Total Liabilities

A positive net worth indicates that you own more than you owe, while a negative net worth means your liabilities exceed your assets.


The income statement provides a summary of your income and expenses over a specific period, usually a year. This information helps you understand your cash flow and identify areas where you can improve your financial situation.


As a retiree, your income may come from various sources, such as:

  • Social Security benefits
  • Pension payments
  • Retirement account distributions (401(k), IRA)
  • Investment income (dividends, interest, capital gains)
  • Rental income
  • Part-time or consulting work

List all your sources of income and their respective amounts.


Your expenses can be divided into two categories: fixed and variable.

Fixed expenses are consistent from month to month, such as:

Variable expenses fluctuate and may include:

List your expenses by category and calculate the total for each.

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Cash Flow Statement

The cash flow statement summarizes your income and expenses, showing how much cash is coming in and going out over a specific period. This information helps you understand your spending patterns and identify areas where you can cut back or save more.

To create a cash flow statement:

  1. Begin with your total income from all sources.
  2. Subtract your total expenses (fixed and variable).
  3. The result is your net cash flow, which can be positive (more income than expenses) or negative (more expenses than income).

A positive cash flow indicates that you're living within your means and have the opportunity to save or invest more. A negative cash flow suggests that you need to reduce expenses or find additional sources of income to maintain your financial stability.


When creating your personal financial statement, include the following:

  • All assets owned by you and your spouse (if married)
  • All liabilities owed by you and your spouse
  • Income from all sources
  • Expenses in all categories
  • Any anticipated changes in income or expenses (e.g., a part-time job or a significant purchase)


Exclude the following items from your personal financial statement:

  • Assets or liabilities that belong to a business entity, unless you're personally responsible for them
  • Rented assets, such as a leased car or an apartment, as these are not considered part of your net worth
  • Small personal property items, such as furniture or household goods, unless they have significant value or can easily be sold


Once you've created your personal financial statement, use it to set and achieve your financial goals in retirement:

  1. Analyze your net worth: Review your net worth and identify areas for improvement. Consider paying down high-interest debt, increasing your savings, or adjusting your investment strategy.
  2. Assess your cash flow: Examine your income and expenses to ensure you're living within your means. Look for opportunities to reduce expenses or increase income, such as downsizing your home or taking on a part-time job.
  3. Set realistic goals: Use your PFS to set achievable financial goals, such as building an emergency fund, paying off debt, or saving for a specific purpose (travel, home renovations, or leaving a legacy).
  4. Monitor your progress: Update your personal financial statement regularly (e.g., annually) to track your progress and make necessary adjustments to your financial plan.
  5. Collaborate with professionals: Share your PFS with your financial advisor, accountant, or attorney to receive personalized advice and guidance on optimizing your retirement finances.


By creating and maintaining a comprehensive personal financial statement, you'll gain a clear understanding of your financial position and be better equipped to make informed decisions throughout your retirement years. This valuable tool will help you achieve financial stability and peace of mind as you enjoy your well-deserved retirement.

 ðŸ‘‰ If you would like to get a FREE retirement assessment, click the link to schedule your 20-minute call to start the retirement assessment process.

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