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Rich Retirees Are Hoarding Cash Out of Fear

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Re: Rich Retirees Are Hoarding Cash Out of Fear

#51

Post by xvedejas »

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:/…

https://en.m.wikipedia.org/wiki/Paradox_of_thrift

"an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower total saving."

Re: Rich Retirees Are Hoarding Cash Out of Fear

#52

Post by FabHK »

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:/…

The problem is that their individual virtuosity (or frugality) can hold back the economy as a whole (and poor people might suffer most from that).

This is Keynes' Paradox of thrift.

https://en.wikipedia.org/wiki/Paradox_of_thrift

Re: Rich Retirees Are Hoarding Cash Out of Fear

#53

Post by stupidhn »

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.

There are two sides to every transaction, and whether low interest rates are good or bad depends on which side of the transaction you are on. Nobody is entitled to high rates on their savings.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#54

Post by msabalau »

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.

Oh, if we had high interest rates and inflation, people with fixed incomes and savers would be feeling horrible too.

The idea that there would be safe investments with decent returns is inherently ridiculous. The closest one can come is oligarchs buying tax policy, or baby boomers making sure that housing stock is inadequate so the prioe of the their home goes up artificially at the expense of the young and poor.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#55

Post by blhack »

RangerScience wrote: post #10

Fuck. I'm 30, and I just went through this. I quit a bad job to try to do my own thing; after a few months without a paycheck - despite having plenty of saving six ways from Sunday - I clammed up almost completely, not wanting to spend a dime. I was miserable. It's the same feeling as item hoarding in CRPGs. Seems like I either need to never retire, or set up a trust for myself so I have a guaranteed allowance. (Or d…

This is tough, man. Some things I did when I was younger that helped me with this:

1) Go for a period of time (I did a month) living off of rice and beans (as far as I can find, the cheapest way to get close to a complete meal)[1]

2) Pare down everything in your life that isn't absolutely necessary. I put my bed in storage and lived in a hammock for a year. Cut out hot water for a period, stuff like that.

Once you do some of those things and realize that you can do it, living on a small income (or savings) in order to work on something becomes a lot easier.

I'm really lucky in that my runway is infinite, and a big part of it is because of the things that I listed. I know exactly how much the minimum I need to live off of is, I know what its like to live on that amount of money, and I know that it isn't scary.

[0]: A lot of the world lives off of this. I'm not saying that this is a path to complete nutrition. It isn't. Everyone should eat a balanced diet.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#56

Post by matchagaucho »

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:/…

"$14.9 trillion in individual retirement accounts and 401(k)-style plans."

These are also tax-deferred plans... income the IRS is not receiving.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#57

Post by drew1492 »

djrogers wrote: post #23
1001101 wrote: post #15

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…

That's how much they had left when they died - not what they had when they retired. So that's after the 20-30 years of living off those savings...

Spending down your principal may not be a smart idea though, especially if one is in good health. It runs the risk of them outliving their savings. Spending 4% or less of your assets annually is sustainable indefinitely, statistically speaking.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#58

Post by stupidhn »

Artlav wrote: post #13

Why is it painted as a problem? Why should you spend more than you need? Why is "enjoying a retirement" supposed to only be achieved by spending more money? I don't get the point of the article.

Why should you save more than you need? What good does it do?

Re: Rich Retirees Are Hoarding Cash Out of Fear

#59

Post by MrGrillet »

Maybe these people are well off because the developed the habit of saving over a lifetime and they are simply continuing the habit. If they were spenders, they wouldn't have the reserves to speak of.

It might not be fear but simply a practical habit that there is no real reason for them to break.

Keep in mind many people will have purchased items or experiences they desire throughout their life, rather than simply waiting for retirement.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#60

Post by asdfjlkasdf88 »

FabHK wrote: post #52
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:/…

The problem is that their individual virtuosity (or frugality) can hold back the economy as a whole (and poor people might suffer most from that). This is Keynes' Paradox of thrift. https://en.wikipedia.org/wiki/Paradox_of_thrift

Perhaps we should rethink the under pinnings of our culture rather than continue pushing "excessive material consumption"?

Seems strange to live on the notions of man who lived before today's environmental concerns became cause for alarm.

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