Assume you have no job, no investments, no interest earnings – how long will your savings last you? I did the math last night, at my current expense rate I’ve got about 5 years of savings lined up, and if I sold my apartment and paid off the mortgage that would add another 1-2 years depending on the sales price.
this question depends greatly on the age of the person 5 years isn’t a lot if you are 55, but it is massive if you are 25
I’m sorry, I didn’t know my question of “how long will your savings last you” could be ambiguous enough to be misinterpreted as “how long will your savings last a 55 year old”.
SMIRK Wrote: ------------------------------------------------------- > Assume you have no job, no investments, no > interest earnings – how long will your savings > last you? I did the math last night, at my current > expense rate I’ve got about 5 years of savings > lined up, and if I sold my apartment and paid off > the mortgage that would add another 1-2 years > depending on the sales price. Lame.
5 years worth of savings. That is quite a lot. I am now picturing Donald Duck’s rich uncle diving into his massive pile of gold coins. I would suggest either increasing your current expenditure or donating some of your hoard to Unicef or some similar organisation.
This sounds more like bragging than a real question. And why do you have that much in savings? Seems like you could be getting a far better return plowing most of that into some riskier assets. You should review your own IPS.
notenoughtheta Wrote: ------------------------------------------------------- > This sounds more like bragging than a real > question. And why do you have that much in > savings? Seems like you could be getting a far > better return plowing most of that into some > riskier assets. You should review your own IPS. I thought so too - may be a very insecure person, or just another thug.
If you plan to change careers at some point, then having several years’ of savings can be a good idea. In this environment up to 2 years of “emergency funds” might be sensible if you are not planning to do a career change. It’s true that having more than that in savings is somewhat unnecessary in normal times. However, I don’t think that cash is necessarily a bad place to be right now. Just realize that the cash is not truly part of your savings, but rather an active investment decision for allocating your investments. There are arguments that cash is not a good place to be in an investment portfolio right now, and I understand their logic (and even agree with it to some extent), but I also think that a large cash allocation right now is not necessarily a crazy idea.
Hm, just was thinking about this last night. I suspect we’ve got somewhere in the ballpark of 12 months of savings built-up. Of course, my wife quitting her job and landing another one 11 months later kind of blew a hole in the build-up, but we’re still far far ahead of others. If we were to sell my rental property, depending on the sales price – I could potentially have another 12-15 months right there.
That’s a ton of savings - good for you. Wish I had that much money saved up but I end up spending most of it on family, charity and travel. How much do people normally save up for in order to continue a decent existence without paychecks? Like 16-24 months? And does this include liquid assets that can be realized for cash as well?
Good for you SMIRK - you should call the Suze Orman show or maybe Dave Ramsey and scream “I have 5 years of savings!”
As Philip mentioned, age does matter a lot in this equation (and also if you have family to support). In my case, I started my career not that long ago and with Employment Insurance (4 months), I would say I could survive without a job for over a year.
SMIRK Wrote: ------------------------------------------------------- > I’m sorry, I didn’t know my question of “how long > will your savings last you” could be ambiguous > enough to be misinterpreted as “how long will your > savings last a 55 year old”. I’m sorry , my point was that without people saying their ages on this forum, there is no way to gauge how good or bad 5 years of savings really is, smirk.
numi Wrote: ------------------------------------------------------- > That’s a ton of savings - good for you. Wish I had > that much money saved up but I end up spending > most of it on family, charity and travel. How much > do people normally save up for in order to > continue a decent existence without paychecks? > Like 16-24 months? And does this include liquid > assets that can be realized for cash as well? Also my question was specifically regarding single individuals under age 35
Have you included “unexpected expenses,” you know, the friend that’s getting married and you need to travel there, or the time 8 months into a jobless stint that you want to treat your spouse or prospective date to something special because you’re sick of living like a pauper. Or that toothache that turns out to require a root canal. It’s surprising how difficult it can be to get those extras under control. Also, if you really are unemployed for 5 years, it’s highly likely you will decide after a year or so to launch your own business of some sort, maybe consulting, maybe something else. Those will require additional expenses that will mostly come out of savings. So if you’ve done your planing based on “stable recurring expenses,” you may be underestimating your true burn rate.
Long term disability can also be a real bitch. I’m not talking about the nut jobs that have “mental health issues” (though after studying for CFA, you could get that …) but I’m talking about stuff like getting hit by a car and spending 6+ months in a hospital with 2 of them in intensive care. (happened to a close co-worker of mine. he got creamed by a chick on a cell phone in early july and didn’t come home until new years)
bchadwick Wrote: ------------------------------------------------------- > Have you included “unexpected expenses,” you know, > the friend that’s getting married and you need to > travel there, or the time 8 months into a jobless > stint that you want to treat your spouse or > prospective date to something special because > you’re sick of living like a pauper. Or that > toothache that turns out to require a root canal. > It’s surprising how difficult it can be to get > those extras under control. > > Also, if you really are unemployed for 5 years, > it’s highly likely you will decide after a year or > so to launch your own business of some sort, maybe > consulting, maybe something else. Those will > require additional expenses that will mostly come > out of savings. So if you’ve done your planing > based on “stable recurring expenses,” you may be > underestimating your true burn rate. Or the kid from the hooters waitress in Buffalo you knocked up? Oh…wait…nevermind.
numi Wrote: ------------------------------------------------------- > That’s a ton of savings - good for you. Wish I had > that much money saved up but I end up spending > most of it on family, charity and travel. How much > do people normally save up for in order to > continue a decent existence without paychecks? > Like 16-24 months? And does this include liquid > assets that can be realized for cash as well? Yeah my question included brokerage assets and any retirement assets less early withdrawal penalties and taxes. I assign a 40% discount to my retirement assets, so say if I had $500,000 socked away in an IRA/401k, I would count that as $300,000 in liquid cash. I also subtracted closing costs and broker commissions from my apartment’s value.
So, this thread is an indirect way of asking how much money people have? Nice.
^ I reckon you haven’t got much,lol