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Rich Retirees Are Hoarding Cash Out of Fear

bloomberg.com

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Re: Rich Retirees Are Hoarding Cash Out of Fear

#11

Post by tmh79 »

gedy wrote: post #3

Fear? Seems more that there are simply no safe investments with decent returns, interest rates are abysmal. I think folks are 'hoarding' simply to not run out by the time they die. Low interest rates are painted as great for the economy, but they amount to a war on savers and fixed incomes.

Savers like "money in a bank account" savers, or savers as in "I have a bunch of money I want to put somewhere, where does it go between ETFs/Real Estate/etc". Low interest rates are great for the 2nd group because of the insane asset price inflation we've seen in the past few years, especially in housing, which is the largest store of wealth for most old folks in the US IIRC.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#12

Post by acover »

macspoofing wrote: post #7
charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

Way to take down that strawman.

It's not a strawman. Most of the article is written with the assumption that not spending all your money is sub-optimal.

From the article:

> After a lifetime of saving, it requires some psychological gymnastics to start spending your nest egg. Browning’s suggestion is that financial planners urge their thriftiest clients to make big purchases–like a second home or a fancy car–before they retire, out of their pot of savings. The idea, he said, is “training people to spend.”

Edit: this comment is attracting a surprising amount of downvotes. Strangeness

Re: Rich Retirees Are Hoarding Cash Out of Fear

#14

Post by bradleyjg »

charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

Optionality has value but it decays over time. If you forgo consumption in favor of savings up until the very end then you haven't been better off, you've been worse off. The dead can't benefit from spending money.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#15

Post by 1001101 »

FTA, the value of the average retiree's estate is ~300k in the 60s, 70s, and 80s. Using the 4% rule (make your money last 30 years), that's 12,000 a year, and that's probably skewed upward by the compounding of the super wealthy (20 richest people worth more than bottom 50%, 150 million people). The median is probably much, much lower (I'd wager 50k). That's living off of cat food in both cases, and if you're worried about social security or your pension... Did I miss something?

Re: Rich Retirees Are Hoarding Cash Out of Fear

#16

Post by djrogers »

There are a lot of reasons why retirees could wind up spending less money aside form 'hoarding'. For one thing, retirees often have paid off their homes, and have no mortgage payments. In addition to that, having a daily job entails a lot of soft costs that often go unnoticed - without your daily commute, your car (and tank of gas) will last a lot longer, you won't eat out for lunch as often, and even your wardrobe will likely stretch further.

If my grandfather and father in law are any indication, the extra time around the house also mean that you can do a lot of work on your house yourself that you may have had to pay a plumber, carpenter, or electrician to do before.

Basically, a retired person can generally maintain their lifestyle on less money than a working person...

Re: Rich Retirees Are Hoarding Cash Out of Fear

#17

Post by chc »

charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

One way to frame this is "corporations want to suck that money away." Another way to frame it is "most participants in the economy are non-rich and would appreciate that money more, so it's unfortunate if it's sitting around making nobody happy and not adding much in the way of security to an already-wealthy person."

Re: Rich Retirees Are Hoarding Cash Out of Fear

#18

Post by djrogers »

bradleyjg wrote: post #14
charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

Optionality has value but it decays over time. If you forgo consumption in favor of savings up until the very end then you haven't been better off, you've been worse off. The dead can't benefit from spending money.

The benefit of leaving my heirs a legacy far outweighs any 'benefit' I'd get from spending money needlessly...

Re: Rich Retirees Are Hoarding Cash Out of Fear

#19

Post by stuffedBelly »

too frugally

hmmm...spending habit established over decades is not an easy thing to change, no matter how much money one has. I am not convinced FEAR is a dominant factor. It could simply be that people think there is no need to spend much in order to have a decent life after retirement.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#20

Post by beambot »

bradleyjg wrote: post #14
charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

Optionality has value but it decays over time. If you forgo consumption in favor of savings up until the very end then you haven't been better off, you've been worse off. The dead can't benefit from spending money.

What about peace of mind & financial stability? Those don't decline over time...

(Also: Estate tax as a way to fund basic income?)

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