How much is enough savings? (+Musings)

[Redbearded]

So, how much is enough? 

By time I get on the road with the rig I want, I'll be low in liquid cash (though by time I sell most of my stuff that may not true, here's hoping!)
I have some retirement accounts and they have done pretty well these last years, but I think everyone has the concern that they will run out too early. I think I have enough given when I run some of the calculators like this one it says I'm getting really close if I get my spending down to $8000/year.

So I guess the question is, when did you feel safe enough to leave it all behind? Was there a magic number? Assuming of course that it was a voluntary choice (I know things can change in an instant, and I've see too many people fall on hard times). Or was the mentality "I have rice for today; I will be thankful. Tomorrow is tomorrow". 

I guess the fear that I have, as I'm sure most people do given the materialistic way that society leaves its indelible bruise, is not having enough (yes I'm aware that this is a trap, there will never be enough once you are in the cycle, it is the nature of want vs. need). Yet the fear still exists; it is real because I give it power, and I have known nothing else. 

Once one transitions to this nomadic lifestyle, does the fear start to abate? Or is that all part of the journey of differentiating between that which is important and that which is not? Of learning what was once valuable is a manipulation, a travesty of what could be.

It's late; sorry for the ramble, at least i'm not screaming into the void, or am I... Will the void answer back?

 

[tripper]

It's all up to you. I would say $500 is the least you could do it on up to $2000 to comfortably travel around full time.

If you are able to plan it I would go $1000 minimum a month, so you can enjoy some leisure stuff and eat well too.

I did it on much, much less years ago, $20-30 a week on a motorcycle, but I was young and able to live off ramen well.

I plan on a minimum of $1500 for myself, so I can hit some National and state parks in addition to boon docking every month.

BTW $8000 / 12 is an ominous number $666 a month is too low to have a really enjoyable time, are you able to supplement it by part time work like campground hosting?

 

[Redbearded]

My skill set is broad and wide! My patience; well, that's another story

I'm sure I can find work when I want it, I just don't know if I will want it. The first year I will be doing some tech work for my mom's office remotely and getting like 1k a month or so. I can always go work tax season somewhere, though if I work for someone other than my mom I think I may be better off shooting my own foot, lol. I can do just about anything computery except for photoshop and the creative stuff (that stuff takes talent, not just skill). I can do bookkeeping and other accounting stuff. If times really get desperate I can go back to school and get a masters or just put my degree to use...

I think my biggest issue is finding stuff to do that is there when I want to do it, as opposed to being on the hook to continually perform. Most places want to pin you down and want long term commitment, not that I mind being reliable. Maybe I'll feel different after a while on the road and in the desert.

 

[vsession]

The most used method is the 4% rule for retirement. Your current age may be the biggest factor and what will be your plan B. No matter what, always have a plan B if the nomadic life doesn't work out has you though. If you plan on living on 8000/year, which is more surviving than living IMO, you need to have 8000x25= 200000 in saving if you never want to work again. Your chance of success will be in the 90% range. If you're 20 years old, this may not work well since the 4% rule is for a 30 years retirement.

Basically, your question can't be answered, some people feel happy with having 1000$ in the bank account without having any job and some feel stressed with 200000$ and a full time job.

For me personally, having a plan B is more important than the money in the bank account, knowing what to do in advance if X happen is my way of reducing stress.

 

[Almost There]

How much is enough - that depends entirely on the person!

The most common suggestion is that you have at least enough available to replace an engine or a transmission and to cover the cost of a cheap motel while it's being done.

Personally, I like having enough in my bank to cover replacing the vehicle itself if it all went to hell in a handbasket in a hurry. Yes, my insurance is set up to replace the whole vehicle but they're not known for being fast to hand out the check, particularly if I'm on the road somewhere, which I always am! I want in to another van NOW, not later. I don't want to be looking at buying a piece of crap vehicle because I don't have enough money for something better!

The knowledge that if I ever needed to pick up a job is also priceless. If I ever found myself in a hard place, work is always a possibility.

Keep in mind that the retirement calculators were set up for people who wanted to maintain their *existing* way of life...3 bedroom home, 2 cars, annual vacation etc. etc. etc. The calculators only reduce down by the amount of 'work related costs' like business clothing etc. They do NOT take into consideration a different way of living at all.

Living on $8G a year is entirely possible. I can run out fingers and toes many times over, of names of people who do so every month, every year, because that's in line with what their SSI is. They have no choice.

Herein lies the problem:

I guess the fear that I have, as I'm sure most people do given the materialistic way that society leaves its indelible bruise, is not having enough (yes I'm aware that this is a trap, there will never be enough once you are in the cycle, it is the nature of want vs. need). Yet the fear still exists; it is real because I give it power, and I have known nothing else.

Quit giving it power!

And yes, most people find that their fears subside, stress levels lower and their entire way of thinking of the universe shifts once they're out here!

 

[lenny flank]

I always keep a few thousand on hand for emergency repairs if needed.

And I at least TRY to keep enough on hand to replace the van and everything in it if necessary.

It's my home. I can't be without it.

 

[vsession]

The calculator is based on your spending and not a lifestyle, if you spend 8000/year, in a home or in a van, you need to have 200000 to maintain that 8000/year for a retirement period of 30 years, that how the 4% rule is calculated. For more info, google it.

To know how much your spending will differ from home vs van, It depend on how much traveling you do, for me, I put the rent has gas money, maintenance cost, etc and it's close to be the same. If your rent is very expensive and don't plan to travel a lot, it will probably mean saving.

 

[slynne]

I was just thinking of this very question this morning. Initially it will not be a problem for me as I plan on keeping my job. However, that depends on how willing they will be to allow me to work remotely. I think there is a good chance that they will but if they don't and I decide to quit this super good paying job, things will be different. I do have skills though which are transferable to other jobs and I thought that maybe I could make do with $1500-2k a month, which is about what I think I could earn full time temping. Half of my monthly expenses would be health insurance though. I guess there is really no good way around that.

 

[Almost There]

Vsession, that 200,000 figure is dependent on there being no further income of any sort whatsover so that it is the sole generator of income by way of interest or investment potential.

I don't need 200G to start off my retirement with because I have a monthly income. If it's not sufficient to support me in the manner to which I would like to become accustomed (it is) then and only then do I need to have a way and means to supplement it either by having money in the bank/investment or by some other means.

Here's where that 4% rule came from:

The 4% rule was introduced in 1994 by financial advisor Bill Bengen and was later made famous in a study by several professors at Trinity University. The rule suggests that you can withdraw 4% of your nest egg in your first year of retirement, adjusting future withdrawals for inflation, in order to make your money last through retirement. It assumes a portfolio that's 60% in stocks and 40% in bonds, and it's designed to make your money last through 30 years.

Guess what - it was formulated by someone who thought you should have thousands and thousands of dollars in investment accounts and takes absolutely nothing into consideration about lifestyle or other sources of income such as pensions.

IMHO it's just another piece of the fear mongering that tries to keep us all nicely invested in a material way of life!

 

[ped]

if you're making under $13.5k insurance can be had through medicaid (or it used to, better double check now). If you're income is low you can also get SNAP. actually cooking from scratch saves a ton of money. and you're going to be 'out there' so it's easy to avoid fast food everyday. Get a list together of meals you like to eat and make it budget friendly. widle it down to cheaper ingredients. you'll find eating for $100 a month not unreasonable.

So with insurance out of the way and food budgets under control the next step is try and control the urge to burn the road up. Spend your time in towns on the weekend and camp on the way to a different town during the week. keep it under say 150 miles. So then you're looking like 50 gallons a month at todays prices - $125. 

for a savings for breakdowns apply for a credit card. $3000-4000 should be plenty. Now with all that you dont need full coverage. If you classify the van as an RV, basic coverage is somewhere in the $10-15 a month. Mine is $11.25 

you're looking at an annual budget more around $4-5k depending how much internet you want and whether you go with a mifi/pre-paid phone or just a general smartphone plan.

 

[wanderingfreeman]

Hello, where are you getting RV insurance for $11/month? I currently use USAA and pay roughly $40/month.

 

[musicman]

If you ck out bob wells videos, you will see as low as 250/ month. There are lots out here at around 600/ month

 

[mpruet]

So, how much is enough? 

By time I get on the road with the rig I want, I'll be low in liquid cash (though by time I sell most of my stuff that may not true, here's hoping!)
I have some retirement accounts and they have done pretty well these last years, but I think everyone has the concern that they will run out too early. I think I have enough given when I run some of the calculators like this one it says I'm getting really close if I get my spending down to $8000/year.

It's going to depend on 1) your lifestyle and 2) your ability/willingness to work while on the road.  I would always have enough to have the next year's expenses covered - even if you plan on working while on the road.  You just never know when an emergency is going to come up. 

You might be able to get by on $8K a year, but is that going to cover emergencies?  What if you need a major repair on your rig such as a new transmission or rebuilt engine?  In addition to what you think your normal expenses are going to be, you'd be wise to also have enough to cover significant one time expenses. You don't want to have to use your food budget to buy a new pair of tires.

 

[mayble]

It looks like I'll have about $50k in a 401(k) account when I make the leap next year, after paying off debt and getting the van ready.  
I'll be 55, and I'm debating whether to try and stretch that money by working part time until I start collecting Social Security in 7-10 years, or just take a long vacation until it runs out before going back to work.
I won't know what I'm doing until I do it.  Either way, it will be an improvement over the normal/safe/stagnant life I've got going on now.

 

[John61CT]

Key for me is to separate out the Vehicle fund from other costs of living, because that is not a steady expense, can in fact require more in one hit than I'd spend on everything else for a whole year.

I would start out with as much in there as what the vehicle cost, or at least $5K, and then add to it per mile as below, from another thread:

______
For me, biggest consumer of "disposable" income is long road trips.

And when stationary, food prepared by others rather than cooking yourself. 

I figure $1 a mile for my internal budgeting, and it's pretty easy to do a thousand miles in a month sometimes. 

That is to cover all vehicle costs, from fuel, to being prepared for long tows from off the pavement, to major drivetrain repairs, to improving the buildout, whether comfort or aesthetics.

If I want to drive 400 miles tomorrow, but don't have $400 ready in my CurrentOperations account to transfer in to the VehicleDoNotTouch account, I just stay in place until I've saved it up and **actually made the transfer** there. 

And if/when I'm on any sort of Gov or family assistance, I count it internally as income.

Some say that's crazy too much, $1 a mile! To them I say

It's nice to have options, and over the decades I've been **stuck with none** out in the middle of whoop-whoop, too **many darn** times, to skimp on that budget category anymore. 

As/if I accumulate a surplus, that just means I have a greater range of choices, spending stupid money on keeping my beloved going (and not having to do a fresh buildout) 

or upgrading to a larger or more reliable vehicle when I decide to replace her, and maybe a nicer level of buildout. 

If I *did* end up with over say $50 grand in there (dreams are good! )

I suppose I *might* tap into it for say, medical care if needed. 

Or maybe I'd keep saving up for a Unimog

 

[mpruet]

It looks like I'll have about $50k in a 401(k) account when I make the leap next year, after paying off debt and getting the van ready.  
I'll be 55, and I'm debating whether to try and stretch that money by working part time until I start collecting Social Security in 7-10 years, or just take a long vacation until it runs out before going back to work.
I won't know what I'm doing until I do it.  Either way, it will be an improvement over the normal/safe/stagnant life I've got going on now.

I don't think that you can withdraw from a 401(k) without a penalty before 59-1/2.  $50K over a 5 year period might be too tight.  You probably have health insurance if you are working for a company which offers a 401(k) and you are currently 10 years away from medicare.  That would mean that your medical cost will increase if you pull the plug now. 

It might be wiser to move into a van, but continue to live where you are currently working.  You could then become a "weekend nomad".  That would decrease your expenses allowing you to accumulate more cash until you go full time. And being a weekend nomad might be enough to make you feel that you have a better life than you currently have.

 

[mayble]

thanks for the advice, but it's not like i haven't done any research

you can withdraw your 401(k) with no penalty if you leave the company in the year you turn age 55 or later
$50k would give me about $600-700/month until age 62, or about $1500/month for about 3 years - so i either work part time to supplement the $600 or goof off for a couple years, then go back to work until age 62 (or 65)

health insurance will be interesting, to say the least, and will be a factor in determining my domicile state once we see what happens in dc
if i stay in my current state, i'll be eligible for medicaid but the cost of car insurance will probably drive me out (so to speak)

it would be "wiser" to keep working until i'm 70 - that ain't gonna happen lol

 

[wagoneer]

Turning 70 coming March, still working but on my own terms 2 days a week. Idle hands are the devils playground.

 

[mpruet]

thanks for the advice, but it's not like i haven't done any research

you can withdraw your 401(k) with no penalty if you leave the company in the year you turn age 55 or later
$50k would give me about $600-700/month until age 62, or about $1500/month for about 3 years - so i either work part time to supplement the $600 or goof off for a couple years, then go back to work until age 62 (or 65)

health insurance will be interesting, to say the least, and will be a factor in determining my domicile state once we see what happens in dc
if i stay in my current state, i'll be eligible for medicaid but the cost of car insurance will probably drive me out (so to speak)

it would be "wiser" to keep working until i'm 70 - that ain't gonna happen lol

I stand corrected about the withdrawal age.

 

[Travelmonkey]

I stand corrected about the withdrawal age.

I never heard of the rule of 55, either.  I'm glad she pointed that out.  It sounds like it is 401k specific (not IRA).  If folks are getting close to 55, it makes sense keeping retirement funds in a 401k vs rolling over into an IRA (which is what I've done when changing jobs).

I assume withdrawals are taxed like income so that is a consideration if you want to qualify for ACA subsidies or keep income so low you can get Medicare (or whatever the low income program is called).  If you can tap other sources of income/savings and not touch your 401k, you could continue to have money grow as a tax deferred savings account.