Savings required to retire at 40?

[Master_d]

Hello. This is my first post and I apologize in advance if this question gets asked repeatedly in here. 

I'm considering selling my home and most of my belongings and exchanging them for an RV and never working again. I figure food + phone + health insurance should be around ~$750/month for a single person but I'm interested in all the other monthly costs an RV owner would experience like park fees, waste removal fees, RV insurance, average monthly gas expenditure? Anything else I'm missing? I'm comfortable doing most of my own repairs or at least attempting it first and was looking for a minimum cost of living where you try to live as cheaply as possible so that you can leave the majority of your money invested. I will still have around $1100/month in rental income even if I quit my job. Ideally I'd like to keep this source of income and just focus on how much cash savings I'd need to get me to retirement age when I'd be able draw social security and my 401ks

 

[bullfrog]

It is a very personal subjective subject. There are plenty of YouTube videos out there. What is possible and what will meet your needs are not the same things. An easy general estimate just isn’t possible. You can make the lifestyle really cheap by only traveling when you have to and utilizing area resources. Every time you move it costs money. Every night you pay to camp it costs money. If you need full hook ups or need internet or phone service it costs money. The type of RV you get will determine somewhat different repair parts costs. Boondocking requires you be your own utility company. How you choose to do that determines costs. Different parts of the country cost different amounts of money to stay in depending on the time of the year. More people or pets cost money and somewhat determines where you will be able to stay at what costs. First thing to figure out are your needs. Are you trying to create a mobile apartment you can stand up in, shower and have unlimited electric power for things like heat and air conditioning? Do you plan on traveling much? Do you already have a vehicle or RV picked out? Why do you think it is a good choice for you? The more we know about your needs the more options we can rule out. Once that is done then we can start talking costs.

 

[RoamerRV428]

40. You got a long way to SS checks figure 22 or 25 years before you collect one.
Your 1100 a month in rental is good but you also have to declare as income right? so it is less than truly if you think about it or is that clear? and then of course your costs to maintain that rental? So that 1100 is subject to some hits maybe? Plus upkeep of rental of course can cost you unexpectedly maybe?

Anyone can live cheap for sure. But how low you can survive on what lifestyle you want is just so personal.

It takes always more money than one thinks that old, I think 2000 per month is enough for it all and then come to find out you are spending more like 2500 a month.....so.....the flip is you figure like 2500 a month is a safe amt for your lifestyle chosen and you are only spending around 2k and you over shot your estimates.

again just showing it is a very personal thing.

key to it all is nothing wrong with selling it all and trying it You keep that money invested and if you find out in a year or so you don't like your situation, you can always get some money out and buy a small home again if wanted. As much as a risk it all is, it isn't a big risk if your money is there as backup when needed so.....you are in a good situation tho.

Plus you can workcamp for free site and power kinda thing if wanted. Boondock more thru a month to save some cash on campsites, etc.

Money bleeds as we all know...LOL...hemorrhages from our wallets some days! Every cost you have now you will have on the road. Your rv will be your home so the usual applies.

If you google, rv full time on the road budgets, you can get alot of rv'ers posting their budgets showing costs but of course most of these are prepared and living a higher lifestyle than 'how cheap can I live' on the road but it gives you an idea of what to expect.

best of luck on how you decide to roll! A big adventure and step to change your lifestyle is cool. Go for it if you really want it!

 

[ckelly78z]

This all assumes that you will be perfectly healthy for the next 25 years, with no car trouble either?

 

[Freelander]

The way I see it, 'Self Contained' means Self Contained, staying in an RV park can get expensive at $20-$40 a night, it adds up quickly.

When I started looking at this, my main goal was to Boondock as much as possible and stay out of the parks. A park once in a while is ok, to help ease the load of boon docking, like a good hot shower without worrying about using too much water, or using the AC if needed, or be able to wash clothes at the park laundromat.

But things like breakdowns can blow your whole budget for a few months.

I'm still getting the hang on this Boondocking life, but so far I haven't found any thing I couldn't overcome.

But every time I go out, I find more things that I need to do to improve life a little bit.

 

[gsfish]

Master_d

Your ability to do repairs has the potential to save you thousands.

People are so different it is impossible to come up with a figure of a lifetime budget. SOme want new everything while others (me) are just as happy with used at 1/4th the cost... No way to know where the economy will be in ten or twenty years... Too many variables.

Guy

BTW: Welcome to the forum.

 

[rvwandering]

Welcome to the CRVL forums Master_d! Lots of good advice so far! As has been stated already your question is impossible to answer because there are too many variables however you do have leeway with almost every expense, even vehicle insurance and health insurance. If you've never been camping, try it out using your current vehicle and a tent to see if it's a good fit for you.

To help you learn the ins and outs of these forums, this "Tips, Tricks and Rules" post lists some helpful information to get you started.

Most of our rules boil down to two simple over-riding principles: 1) What you post should provide good information (like your introductory post), and 2) Any response to someone else's post should make them feel glad they are part of this forum community.

We look forward to hearing more from you.

 

[maki2]

There are lots of websites devoted to retiring early with estimates and ways to generate income without a "real job".

But if you. Want a reality check on how one man manages t o live and travel on rentalinvome (more than one rental property) then subscribe to the youtube channell Seven Wanders The World. You will see what a mess rental prperties can make of your plans when tenants inadvertly have things happen in their lives or accdentaly damase the property.

Good tenants or not things wear out and accidents happen. So part of your savings has to cover that stuff. He does recover some of the money he spent to take care of the issues but he can' t recover the months of time it takes to go and personally manage the issues. Being a landlord is still workiing at a job. Unfortunately when things happen you might be a long ways away.

 

[mpruet]

I follow the 4% guide, which allows a 4% withdrawal of your assets per year - assuming that they are fairly well invested growing with an annual average of 8%. (You don’t want to draw more than the growth or will risk running out of money over time.). That means you can calculate what your savings should be by dividing your estimated annual expenses by 0.04. Alternatively you can multiple your estimated annual expenses by 25. As an example assume that your annual expenses will be $50,000, then you need to have a nest egg of 50,000 times 25 or $1,250,000. Using averages drawing $50,000 out of $1,250,000 would leave $1,200,000 which should grow by 8% or $1,296,000 over the course of the year. That would allow you to safely withdraw $51,840 on the subsequent year.

This annual increase allow you to keep up with inflation.

You can consider SS, but that’s probably not advisable until after 62, so starting at age 40, you should probably be totally self funding. Once you reach 62, then you can adjust your self funding portion by the same amount as your SS benefit. That’s probably a good thing because you need to increase your nest egg as you reach mid-60s because your health costs will tend to increase.

There is an annual Cost Of Living adjustment with Social Security, but it is rarely more than 1%, so don’t expect that to keep up with inflation.

 

[abnorm]

What Social Security......If you haven't paid into the system for twenty years before "retirement"......What will YOUR benefit check look like ?

 

[WanderingRose]

And if you stop working at 40 that will substantially reduce the amount of Social Security you will receive, when that time comes.

Rental income could suddenly stop for a variety of reasons, and RV’s can be expensive money pits.

How much anyone needs to live on is very individualized and dependent on lots of factors.

My suggestion is that you buy yourself something to camp in and spend some weekends and vacation time trying out a traveling lifestyle, but keep working and saving.

 

[tx2sturgis]

On top of all the good advise above, remember that Social Security retirement benefits are based on the income you had in your working years, and primarily factored based on your top 35 years of income. If some of your highest 35 years of earnings show up as zeros....well ooops....your benefits will not be as much.

Something to think about before you exit the workforce.

(besides, I'm collecting retirement benefits and I need you paying your fair share into there!)

 

[tx2sturgis]

Sorry to have echoed the information about SS, but I guess we were typing at about the same time....

:thumbsup:

 

[mpruet]

Some people can get by with expenses of $1000/month. That generally turns out to be tight, especially for anyone having to fund their own health insurance. Most folks need about $2000/month. Let’s consider the following chart - again following the 4% rule

Monthly.................Yearly......................Nest Egg
Expenses...............Expenses..................Size

1000....................12,000.....................300,000
2000....................24,000.....................600,000
3000....................36,000.....................900,000
4000....................48,000..................1,200,000
...

Historically, you would be investing in the broad market - probably using an index fund. The average annual growth for such funds tends to be somewhere between 8 and 11%, although some years it can be greater. For instance 2020 turned out to be about 16% - even though there was a huge recession starting in April.

 

[Camper]

Sounds real good on paper, but very few have those kinds of funds.

 

[tx2sturgis]

I will add that, beyond finances, if you keep working, there can be a certain sense of fulfillment and productivity...in other words, being 'useful'.

Not that you have to work your butt off, but some kind of productive work gives us focus and goals....witness the many musicians and actors and celebrities that keep working into their 70s and 80's...not because they HAVE to work, but because they CHOOSE to work. 

And hey, it gets them out of the house!

 

[bullfrog]

By reversing the 4% formula My savings are good for about $50 a month! Lol!!! With my retirement and social security from working 35 years worth about $840,000 gives me about $2800 a month to live on. Seems for me a forced retirement savings plan and social security are what worked for me! If saving and investing on my own I wouldn’t have had anywhere near this amount. Find a good job you enjoy doing even if on the road would seem to be best for most people like me.

 

[mpruet]

By reversing the 4% formula My savings are good for about $50 a month! Lol!!! With my retirement and social security from working 35 years worth about $840,000 gives me about $2800 a month to live on. Seems for me a forced retirement savings plan and social security are what worked for me!

Yes, but the question was how much would I have to have saved if I quit work at 40 and didn’t draw SS until 62. That’s 22 years of no income.  At $2800 a month or $33600 a year, you’ll spend $739,200 assuming no inflation.  At a modest inflation rate of 1.5% you would need about $707,000 to have the same purchasing power as you did at age 40.  Not only that, but if you didn’t have it well invested, then you’d be just about broke before you reached 62 and who knows if the earliest age for retirement will remain at 62 in 22 years.   

If you want your money to last and you want to be able to adjust for inflation, then it’s imperative that you don’t draw out more money than your money grew in a year.  Drawing $33600 a year from a $800,000 nest egg means that you are drawing close to 4%.  $840,000 times 4% is $33,600 or $2800/monrh.

 

[mpruet]

Sounds real good on paper, but very few have those kinds of funds.

If you don’t have the funds to support your expenses without additional income, then you have to earn more income.

 

[Freelander]

(besides, I'm collecting retirement benefits and I need you paying your fair share into there!)

I agree I have 3 retirement checks and all 3 are from the Government, I need you to keep paying those taxes so my check keep coming.