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For Your Retirement Preparedness, Go to CAMP

This financial adviser's acronym stands for the four key retirement concerns

By Roger Roemmich

(This article is adapted from the new book, Don’t Eat Dog Food When You’re Old! How to Solve Your Retirement Cash Flow Puzzle by Roger Roemmich.)  
Over the years, it’s amazed me how many people don’t look closely at the big picture of their future retirement plans. They tend to fixate mostly on accumulating assets and retaining assets.

So how should you measure your retirement readiness? That’s hard, but I’ve found that developing what I call a “CAMP” score will help you do it.

(MORE:Avoid These 5 Money Pitfalls of Pre-Retirees)

What CAMP Stands For

A CAMP score is a function of four key retirement concerns:

C is for Cash flow. Retirement cash flow is measured as a percentage of your pre-retirement cash flow. If you need cash flow of $5,000 per month to meet expenses while you are working and you project your retirement cash flow at $4,500, then you are only 90 percent covered. You need to match your working cash flow (what you’re bringing in now to meet expenses while you’re working) to get a CAMP score of 100.

If you don’t score 100, then you can’t afford to retire with enough of a safety margin to head trouble off at the pass. Working part-time can allow you to make up the difference.

The other three factors that go into your CAMP score are all likely to create declines in your cash flow or your assets. But they must be taken into consideration when deciding whether you can afford to retire. Failure to account for them builds risk into your retirement years that could prove financially damaging and could impinge upon the quality of your life.

(MORE: Prepare Your Finances to Live to 100)

These sustaining factors are:

A is for Aging protection against potentially ruinous long-term care needs.

M is for Medical and other health care costs.

P is for Purchasing power, which declines due to inflation. Purchasing power erosion causes cash flow to be inadequate to meet cash expenses or results in using your assets to pay expenses.

(MORE: Retirement Savers' Worst Mistake)


Addressing the A, M and P Concerns

Very few retirees will have enough retirement cash flow to self-insure the sustaining factor risks, so measures should be taken to protect against the risks of Aging, Medical and Purchasing Power. Even if your initial retirement cash flow is good, these three key sustaining factors must be addressed, or our retirement quality of life could be at risk.

Aging: Most people have a longer retirement horizon than in the past, due to health care advances. So the odds of large long-term care expenses have risen significantly. This longevity allows for a long, wonderful retirement but also dramatically increases risks related to long-term care needs.

Medical: Most people have reasonable health insurance while they’re working, but make the mistake of trying to save a few dollars each month on Medicare costs when they retire. Unfortunately, this actually leads to higher medical costs and more risk.

Purchasing power: Most corporate pensions, if you’re lucky enough to have one, do not include an annual inflationary increase. Thus, $3,000 per month at age 66 may look great, but at age 86, it doesn’t look as good.

Coming Soon: An Online Tool for Your CAMP Score

So you can see why an asset-based retirement planning system is seriously flawed. It depends way too much on future investment returns. If investment returns decline, retirees will experience serious declines in retirement cash flows and quality of life.

That’s why I believe cash flow, not assets, is the better way to determine retirement readiness. The CAMP score measures your ability to maintain net monthly cash flows during retirement and meet the inevitable increases in medical costs, long-term care costs and the inflationary pressures of the future.

Do you think you can afford to retire? Determine your own CAMP score and assess your situation honestly. I’ll soon let you figure it out through an online retirement readiness evaluation tool at Provide your email address on my site and I’ll notify you when it’s ready.

Good luck!

Roger Roemmich is author of Don't Eat Dog Food When You're Old! and chief investment officer for ROKA Wealth Strategists. He is a certified public accountant and financial planner. Read More
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