Retirement War Chest | How Much Should You Have In Cash Reserves?

Excellent advice ✅ Stress is the #1 enemy in retirement. (And pre-retirement). 😉 Work, relationship and financial stress greatly reduce life expectancy. Best to eliminate ALL stress. 👍

Fantastic video. When I first decided to retire early I was dejected because saving DURING retirement never even occurred to me. I thought I would have to work until 65 (shoot me!). Now I have slush funds built into my plan (safe, fluid and boring), and I am all set! For the first time in my life I am not depressed/stressed about money!

Amazing how many people don’t understand the importance of having a war chest. Even Garth Turner has a blind spot on this point, which is no surprise considering that he’s a financial advisor who wants to see every dollar invested. The ability of not having to dip into your investments at a loss during bear markets is like a superpower. Good job raising awareness!

Ryhs, I love your simple explanations for some of the most important decisions all of us will have to make in retirement! You make it easy to understand and argue reasons for and against different strategies! Keep them coming!

Omg I’m so Antoine!! Did you make this video just for me Rhys? 🤣. I’m hearing you. Will be in touch next week. 👍 All you videos rock!!

Divide your assets into buckets for the short, medium, and long term. Each bucket has a risk/reward profile to match the time horizon. Periodically weigh the contents of your buckets versus your upcoming needs and “pour” your money from bucket to bucket.

Smart advice as usual 👍

A subject i haven’t totally thought about. Now I am ! Always appreciate the Solid Advice. Thanks

Great video Rhys!

Once again excellent video and good advise by Rhys.

Amazing advice. I love the idea of calling it a war chest. The idea applies to non-retired people too 💪

Since biggest sequence of return risk is first 5 years of your retirement, I have 5 years of stacked GIC. Afterward will maintain 3 years of required income in stacked GIC, specially our rate is still decent. Peace of mind is the king when retire. Thanks Ryhs, believe you will approve my approach.

I call mine the "All Hell Breaks Loose Plan," but I really like the "War Chest," so I will change it in my spreadsheet to that. Once I started building my (now called war chest), the thing that became apparent is that after taking into account CPP, OAS and defined pension payments, the amount of my own money required to meet planned annual expenses in the future was not that big of an amount. I currently have 6 years saved, and I aim to get 10 years. I know it's overkill, but I'm not concerned I'll have too many "near" cash-type investments. Like another comment on this page, parts of my war chest are in my TFSA, RRSP, LIRA, Spouse's RRSP and taxable investment accounts. I have been simply plowing dividends into high-interest savings instead of back into ETFs. Easy Peasy (as some guy I watch likes to say.) D

I’d love to see a video for people with goals to retire extra early ( 45-50yrs old ) how would you calculate how much you need and would the withdrawal rate still be 4%?

I can't wait to hear your thoughts about Alberta and pulling their $$ out of CPP.

Great video Rhys! I almost feel like having a high dividend portfolio in Scenario 1 would have negated much of the trouble Ferdinand had with having to sell his investments during a downturn provided his dividend payments were substantial enough. There are more and more covered call option ETFs out there that have some very interesting monthly returns if one can handle the volatility and doesn't mind the additional risk and higher MERs involved with these types of ETFs. But of course, eevryone's situation is different; just saying, Ferdinand might have benefitted having some high dividend payers (whether they involve covered call ETFs or not).

Hi, just subscribed and really enjoy the way you explain your information. I will be booking a call to see if we are a fit.

Great video. What do you think about the flexible GICs?

As you were talking, I was wondering about how one's high-interest war chest is going to be ravaged by taxes, since interest income is so tax-inefficient. But, arguably, the war chest can be in the TFSA or RRIF/LIF. You need to plan for cash-flow anyway, just keep the buffer in the investment account, continuously being drawn from and replenished. What a difference a couple of years makes. Two years ago, GICs and HISAs paid essentially 0%. Keeping liquidity had a huge opportunity cost. With GICs at 5-6% now, the conversation is very different. One last thought.... if your liquid war chest is really big, make sure you spread it about in such a way that it is all covered by the CDIC deposit protection.

My plan is to turn of my dividend reinvestment plan 6-12 months before retiring and get those funds into a HISA.