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Post Info TOPIC: Rainy Day Funds


RV-Dreams Community Member

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Rainy Day Funds


I wonder, what are the appropriate amuonts of Rainy Day funds to have when full timing?

How much do you set aside?

 

I am thinking of three categories...

1. Health/Medical for 2 people -this is to cover deductible amount before the insurance kicks in

2. RV+Car/Truck+trailer combo - this is to be used for major repairs OR in a catastrophe to live in a hotel or something like that

3. Financial Markets downturn - this is to be used when the markets are down and i donot want to withdraw from the investments

 

thanks

jim



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RV-Dreams Family Member

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I am sure that this will vary from person to person but we like to have $10k set aside in an account for the first two items. It goes up and down by a few thousand depending on what it going on but there is peace of mind knowing we have some set aside in case of emergency.

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I agree, opinions will vary. We are using 3 months of budgeted living expenses as our "cushion" target. We add to it regularly, but invest the excess in conservative mutual funds. If we pull from the cushion we top it off with those invested funds. The cushion is not invested, just saved as ready cash. This strategy gives us a lot of peace of mind, and we have had plenty of first hand experience that it works as intended. 

How ever you calculate what you need for a "rainy day fund", a lot will depend on how steady your income stream is going to be. If it varies a lot, the more you should have set aside.

FWIW, Brian



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My thinking is:-

1. Healthcare - not sure but minimum 10k for both of us
2. RV stuff - probably 5k
3. Financial Mkt - at least 1.5yrs living, say 60k

That says 75k in todays dollars + 3% inflation adjustment each year

Is that too low?

jim

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RV-Dreams Family Member

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Do you have another source of funds for your income, or are you relying on investment income to provide your day to day income? if you have another source (a pension say) then your needs will be less than you suggest. If you are counting on investment income, perhaps your numbers are more reflective of a cautious approach. If you have that kind of investment pile, you should probably seek professional advice on managing you assets to provide for your needs.

The 15K combined in your first two items seems like a fairly reasonable amount. I can't comment on the financial markets aspect of the third item. Everybody has their own comfort level.

Brian



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No pension here, just 401k, RIRA, savings and the likes
Perhaps SS at 67
So i am depending on these to fund my lifestyle

We are 48 now and planning to retire at 53
I plan to have a 70% pre tax and 30% post tax split of available portfolio to withdraw from...
The goal is to minimize taxes and maximize spending for the post retirement era of 40yrs or so

My guess is once every 7years or so the financial markets will be severely down and take year or so to recover
This is when i dip into the rainy day funds. This prevents me from buying high and selling low.

I am a big believer of rainy day funds

jim







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simple poor mans budget !!!

3months personal living expenses......

as much as you can to cover worse case repairs

pretty much treat it just like your home..........you dont have to be rich out here or tons in the bank.......just a few in your head will do it !!!



your budget will reflect your savings...........



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We both have health savings accounts tied to our Health Insurance. We have at least two years full deductible in them. We fund them to the max each year because it helps with the current income taxes and it becomes an IRA when we turn 65. (56 & 54 now).

House is paid off. We'll be downsizing to condo in about a year and will pay cash for new truck and TT. I'm budgeting around $6000/yr for total repairs on them. Shouldn't need to replace truck for at least 5 yrs and will save up to pay cash.

We're fortunate that hubby is drawing a government pension that will support us (although it would be tight). We'll continue to work while we're on the road which will bring in at least $2,000/mth after expenses.

Investments, eventual social security and a frugal lifestyle make life a lot easier.



-- Edited by SuzieQ on Wednesday 30th of December 2015 05:42:57 PM

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Make sure you look at age when you can start making withdrawals from pre-tax funds.

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