Savings! How much is enough?

[Sofisintown]

Say you are a financial pessimist and believe that the economy will collapse in a few years, flooding the job market with desperate people and making it damn near impossible to find a decent job. 

How many dollars would you have in the bank before you can feel comfortable quitting wage labor altogether and pursuing your dreams?

You seem young, so I think most important is to accumulate skills. By that, I don't mean necessarily that you pile up the PHD's and the student loans. I mean that I paid the 30 year old plumber $3400 for 2 days of work, and the guy who put a garage door to my garage $1900 for 4 hours of work. I don't make $3400 in a month! There is a guy who installs glass block windows and stuff, and the waiting for him is 2 months long.
Tradesmen can cash in some serious money and work largely for themselves. Be them. You will always have the skills to carry you through in bad situations.

[RoamerRV428]

It's a catch 22 no matter how you look at it.

One who despises working mostly for that dreaded money....now must think about working A TON to bank sufficient money for the future, a safety net.

What amt of money that is will be so personal to each one.

Cause no 2 people truly ever agree on money matters, from making it to spending it to saving it and investing it LOL
Money is a big fight issue for many HAHA

Thing is only the 20 something asking that question knows the answer because I am older and have my OWN philosophy on how to make money, bank it, spend it etc.

Now if you ask me what would I personally do when I was 20.....well that would be my personal outlook on life and how I needed to live it to fit my life plan...…...so for me at 20 it was work like a demon. Bank the heck out of everything I made. Luckily I am a very frugal/minimalist type so I would spend big on what I wanted, say a boat or ?? that I loved to do in life and enjoy my life exactly how I wanted all the while being frugal in a ton of other areas to bank for older age.

Cause one thing I knew was I didn't mind getting older, I just never wanted to be older and poor. I would do the best of my ability to make sure that didn't happen but as we know, no one can totally control life so....

I did not want to be free on the road when younger. I camped all the time. I went camping with our boat truck camper and pull the boat and enjoyed the heck out of water sports, fishing and more and it was our fab down time after working hard and paying bills to live in a decent home etc.

But my mind was on later down the road also. Bank for true freedom when the time came and we desired just that. Pay off a nice home and when the time was right, sell it. Cash in hand, just like a bank account truly, assets in my mitts when sold. Put most of it away for another home down the line if wanted to get off the road when very old, or find that perfect location we would love to live when out and about wandering thru different locations. Options, money gives you options. Take some of that money and use it to pay for bills on the road etc.

So what I did at 20 and my own life plan won't usually fit others. It is very personal.

So my answer is work. Bank like a demon. When I hit about $250K in the bank I would feel a lot safer.


plus remember what dreams you do want to pursue could cost money to do just that so....

No one will fund your life. It is up to the person to fund their own life and it is all based on what ya want, how you want to do it, how you want to live. What sacrifices you are willing to make for what you desire. Those things won't ever change. Responsibility of it all sits at your doorstep.

eh. just some thoughts

[HalfShadows]

Ditto Roamer!

[MG1912]

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.

[Elbear1]

Its a pipe dream to never have to worry about money. The american BS that suckers fools into the lottery or carrots dopes into working hard for a meager retirement. 

We all hate the grind. Most here are retired but a few of us are societal (socio-economic) dropouts. The reality is even hopping trains requires money. Its much easier to work a few months once in a while than it is to grow your own food due to gov subsidies.

Take temps jobs, take snap, do what you can and find a balance that works for you.

(This post was last modified: 09-29-2019, 10:28 PM by Elbear1.)

[swlands]

What I did was do what I loved. Didn't make a lot of money, but I had a good time doing it. I am a landscape gardener. I have clients who are personal friends - we have supported each other losing spouses, watched each others children grow up. I used to laugh as most of my clients headed into offices to work at a grind I hated while I worked in beautiful multimillion dollar properties making them even better places to hang out. They were busting their balls on a grind so they could pay me to spend 5 days in a space they could only afford to spend 2. I also laughed as I could not afford myself. But seriously - what is wealth? They had the money, still do, but I got to enjoy it and play with it.

A little self knowledge goes a very long way.

[bullfrog]

I am getting older now at 68 and worked hard to raise a family and get a state pension with health benefits and now social security. I semi-retired at 53 and had about $35,000 in the bank when we started traveling and didn't worry about money as we had little in the past. We traveled about 2 years carefree doing a little campground hosting and depleted our bank account in about 2 years. We took minimum wage jobs at Lowes and Walmart as they were easy to get and worked 6 months to get an emergency traveling fund of about $5,000 saved up and started traveling again. We found jobs working in national parks as we enjoyed living in them and you can only do that if you work there. Most of what we made went to travel for supplies as we like very remote locations. I am finding that the older I get the larger the emergency fund has to be as it is difficult for me to do many of the repairs I used to do. For example I built our last two campers and last year we bought a manufactured camper as I just didn't enjoy the last build as it required a lot of ladder time. Reaching social security age / Medicare age and putting those funds into savings while still doing seasonal jobs that are not physically demanding and living on the money from them has worked well for us. It allows us to travel 4 months or so of the year. $2,000 a month would be difficult for the 2 of us to live on in the remote locations we like and as reliable transportation is a must I would say costs would be an additional $500 a month for that so at a minimum of 6 months (the time it takes to get to the next seasonal job) $15,000 in the bank with all debts paid and a good credit rating would make me worry free. Anything below $10,000 and I start to worry and below $5,000 I start to look for better paying jobs to build it back up.

[MG1912]

OP, as you've noticed from the posts here, the sum of money you will need is rather large because of two factors in your conditions:  1) your extreme young age, which requires the amount to last for many decades and 2) your goal to quit wage labor entirely and live on the sum of money in question.

Now then, this is doable fairly quickly, and people do it all the time, but it requires extreme frugality (which you already possess), but also a very high income.  Look up Mr. Money Mustache.  Basically, his wife and he were IT professionals with a very high income (well into six figures).  They saved like demons for a number of years and retired very young with something like $600,000, which they then lived off and never worked again.  In your case, for example, if you had a job that paid $150,000 per year (yes, I realize that is very high and not attainable for most people), and you lived on only $18,000 per year, then you would be able to save $132,000 per year.  With that income, it would take you less than 4 years to save the $485,000 in my example above.

How do you get a job that pays $150,000 per year?  There aren't that many, that's for sure.  The surest bets are probably in IT in major population centers if you have those skills.

Now let's say you do not have skills or education that will allow you to make that kind of money.  Well, then maybe you have skills that can get you a job that pays half that, which is still a high income ($75,000 per year).  Now it will take almost 9 years to save up the $485,000, so you'll be financially independent in your 30's at some point.

But what if you can't get a job that pays that much?  Well, then it probably isn't possible to do.  You will have to do what some have mentioned in this thread:  supplement savings with seasonal work.  But you will always have to work.

[IGBT]

While Mr. Money Mustache did retire early with a modest sum of $600,000 or so, his blog now makes him around $400,000 a year so we really can't tell if it would have worked out long term for him since he is a many multi millionaire now.

[winterwanderer]

Thank you everyone for your input!

@B and C: Definitely agree with hardcore saving. Over 90% of my net income this summer is now in the bank. You are also right in that an economic collapse would make the dollar worthless. Hopefully, I will be able to see that coming and buy a share in a farm commune. 

@mpruet: My numbers are a bit smaller than yours  Current expenditures are in the range of $5000/year, including costly cross-country jaunts.  Slashing that figure in half is highly feasible, by living communally, trading work for essentials, ridesharing...keep the principal untouched in some safe & low-yield investment account. Yes, there is a chance that I will become infected with materialistic ambitions in a couple decades...but I simply cannot stomach the thought of selling the next 10+ years of my life to a corporation on that chance.
As far as Social Security, suffice it to say that the concept is totally incompatible with my political views.

@highdesertranger: I beg to disagree. This summer of work has been like a big heavy meal for a snake. I need a few months before I can even think of eating again.

@swlands: Good advice there. I started this year with an aging vehicle and a year's worth of savings. Felt like the edge of the abyss.

@maki2: Seventy years old!!! Fortunately, we have the Baby Boomers as a living example of how NOT to spend one's life...give everything you've got to a faceless corporation, then retire rich, grumpy, and broken in body and spirit, another useful drone put out to pasture to grow plump and wobbly. I'd much rather be one of those dreamy old gray-haired hippies talking to their plants in the community greenhouse.

@LoupGarou: The parasite mentality is pure anathema to me.

@VanForNow: Small repairs are "learn as you go." Big problems? NPR likes vehicle donations. Car-free living is a gateway to exploring the world.

@Sofisintown: Yes, trades can provide a reliable income and freedom from the grind, but only after a couple years of training experience, requiring complete focus. Endless repetition of a task turns a greenhorn into a master, but it also drives me batsh*t crazy after four or five months.

@RoamerRV428: But if I can slash my expenses to some absurdly small amount, say a tenth of the median household, my savings will go ten times farther. The trick to being rich, IMO, is to keep your desires well short of your ability to fulfill them. 
The dream of home ownership seems to have been lost on my generation, with the wildly inflated prices and looming real estate market crash. At least those bloated wooden boxes cluttering suburbs across the nation. A self-built tiny house, though? Hell yeah!

@MG1912: Thanks for doing the math. Living on a low figure like $250/month can be very enjoyable if work is traded for fresh organic produce, for example. But investing my hard-earned savings in the stock market is just not an option.

@Elbear1: Yes, that statement about "quitting wage labor altogether" was a definite product of a bad day at work. Far more realistic is to put all but $1000 of my savings into an untouchable reserve, then replenish the $1000 whenever I deplete it. Temp jobs, like you suggested. But a person has to be a real worry-wart to worry about money when you have enough to tide you over for a decade.
I hold no illusions about an easy lazy life on a farm. Right now, I work about 3 hours a week for everything I eat. On a farm, that number will be around 30...even higher with a completely self-sufficient operation. Sure, I will be eating much better. But it is far easier to buy at the grocery store.

@swlands: Sounds like those housesitting gigs! Rich people are too busy to live in their dream homes, so they let trusted wanderers stay in them for free, keep them clean and in order...

@bullfrog: We have a similar lifestyle, though $2000/month is far above what I spend, even road tripping through Mexico.

@MG1912: Making that kind of money was feasible in the past, but I lost interest in college and dropped out. It does appear that seasonal work will be part of my future, which is not too bad, because I enjoy the community found at such jobs.

I'll come back to this when my current job ends and I recover from five months of overwork...