09-29-2019, 09:27 PM

I’ll play. I’m going to strictly answer the question you asked. Assuming I was in my twenties – say, 25 – the amount of dollars I would have in my bank (or, more accurately, in my entire portfolio, which might include bank products) in order to feel comfortable quitting wage labor altogether would be the smallest amount which had an 80% chance of success, based on Monte Carlo simulations, of sustaining the high end of what I might need for income for 60 years (when withdrawn from a moderately-risky stock and bond -- say, 83% stocks and 17% bonds -- portfolio at reasonable withdrawal rates).

Now then, if I am "frugal and despise materialism," then the high end of what I think I would need would probably be $1,500 per month. Because you can be as frugal as you want and despise materialism, but even a frugal person might want to travel (which costs gas or diesel) and try nice or exotic foods every once in a while. So some of the low figures I’ve seen here ($250 - $500 per month) feel too low to me.

$1,500 per month equals $18,000 per year. No one knows how long he is going to live, of course, but life expectancy for males is around 85, so that’s why I said the portfolio would have to last 60 years – or, more accurately put, the portfolio would have to have a Monte Carlo simulation chance of success (of lasting 60 years) of 80% for me to be comfortable. That is incorporating the condition you stated that we need to “feel comfortable quitting wage labor altogether.” Assuming flexibility in withdrawal rates (2.5% to 3.7%), the simulation I ran said a portfolio of $480,000 would stand an 80% chance of success.

I would also want an emergency fund in a savings account. I think $5,000 would cover most eventualities. So my answer is $485,000.

Now then, if I am "frugal and despise materialism," then the high end of what I think I would need would probably be $1,500 per month. Because you can be as frugal as you want and despise materialism, but even a frugal person might want to travel (which costs gas or diesel) and try nice or exotic foods every once in a while. So some of the low figures I’ve seen here ($250 - $500 per month) feel too low to me.

$1,500 per month equals $18,000 per year. No one knows how long he is going to live, of course, but life expectancy for males is around 85, so that’s why I said the portfolio would have to last 60 years – or, more accurately put, the portfolio would have to have a Monte Carlo simulation chance of success (of lasting 60 years) of 80% for me to be comfortable. That is incorporating the condition you stated that we need to “feel comfortable quitting wage labor altogether.” Assuming flexibility in withdrawal rates (2.5% to 3.7%), the simulation I ran said a portfolio of $480,000 would stand an 80% chance of success.

I would also want an emergency fund in a savings account. I think $5,000 would cover most eventualities. So my answer is $485,000.