The simple answer is that earnings don’t directly translate into cash flows, and shares are worth only the present value of their future cash flows, not the present value of their future earnings.” He continued, “Future earnings are a component — but not the only important component — of future cash flow per share. In terms of retirement planning, cash flow consists of dependable income sources — such as pensions, rental property income, Social Security, stocks and annuity returns — which cover living expenses.