One of the biggest, major concerns of retirees is their quest to know if the money they have saved for retirement will be enough. Will it last for their entire retirement years? There are a lot of calculators out there that can give you the answer. One of my favorites, is this one from Kiplinger:

We have created a tool to provide you with peace of mind showing approximately how long you will be “OK” in retirement.We call this the “Withdrawal War Chest.” A war chest has historically been defined as a fund accumulated to finance a war, and recently, has expanded its meaning to a fund earmarked for a specific, challenging purpose. There are few financial endeavors more challenging than planning for retirement. Luckily, knowing your Withdrawal War Chest makes such planning much less stressful.

So how do you figure out your Withdrawal War Chest? Here’s our simple process:

  1. Add your total cash reserves AND total cash and bonds in your portfolios to get your War Chest.
  2. Divide your total War Chest by your monthly retirement withdrawal.
  3. That’s it.

This calculation provides an estimated time frame in which your War Chest (cash and bonds) alone could support your cash flow needs without withdrawing or selling a single penny from equities (stocks).

This is a typical scenario for an imaginary couple in retirement

This calculator, however, doesn’t take in the fact of Social Security, Pensions or passive guaranteed income. I based my retirement expenses purposely on what total passive income will come my way, each and every month without ever dipping into my “Withdrawal War Chest”. Because of this, I’ll never run out of retirement money because my savings account remains untouched. Apparently, this strategy is starting to catch on with famous financial advisors (i.e. Suze Orman) because they are beginning to advise their clients the same thing. Like duh?

But not everybody can nor want to do that. They want to live either on the same income they had before retirement or at least 70% to 80% of what they used to live on. I live on 1/3rd of what I used to before retirement.

Just for arguments sake, I ran my numbers and tossed in that I would be withdrawing $200 a month from my War Chest just to make things a bit more easier on myself. The calculator didn’t even give me a numerical answer. It just said this:

That’s exactly right! My savings will GROW over time!

PS: the calculator above gave me the same answer for $500 a month and $1000 a month. I have plenty!

I don’t need to follow the 4% rule or the 3.5% rule or the 2% rule should the stock market tank. I don’t need to follow any rule except keep my expenses low and learn to live on less and enjoy it more by doing so. Living on a low income puts me in the 0% tax category and qualifies me for many benefits my fellow living-on-the-hog counterparts can’t ever sink their teeth in to.

People always think they need to make more money to enjoy life. I found out (the hard way) the opposite is true. That by earning less I have more time to do what I want to do, more resources available to me to accomplish what I set out to do and I have more opportunities to live a creative lifestyle.

Should the SHTF, I’ll be ready to tackle whatever life might send my way. Not only have I won the “War Chest” but I have also won the battle. That’s two for two.