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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

#71

Post by FabHK »

asdfjlkasdf88 wrote: post #60
FabHK wrote: post #52

Earlier quoted context omitted.

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.

I'm certainly not advocating conspicuous consumption and needless spending.

However, these individual actions might collectively have unintended consequences, and that's what the paradox of thrift is about. It's a descriptive concept (i.e. about what happens in the real world), not a normative one (i.e. what people ought to do).

But before you decide what one ought to do, it is best to take into account what actually happens in the world.

It might well be better if people spent more (and that need not be on material things, it could be education, concerts, and so forth).

Re: Rich Retirees Are Hoarding Cash Out of Fear

#73

Post by andrewprock »

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

This seems to contradict the purpose of banks. You put your money into banks so that you earn a savings rate on the money while the banks puts it to work in the economy.

Are the piles of money in mattresses really all that much bigger today than they were 30 years ago? Beyond the demographics of the baby boomers, this feels like a non-story to me.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#74

Post by acover »

skybrian wrote: post #50
acover wrote: post #12

Earlier quoted context omitted.

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 s…

Sub-optimal for whom? What does sub-optimal even mean in this case? Who benefits from "training to spend"? It's not at all clear that the authors of the article are concerned about the well-being of rich old people. There seems to be some other argument that's not being stated explicitly.

The quote is about what financial planners should recommend to their clients (the retiree).

I don't think the article is suggesting that financial planners recommend their clients take one for the team and spend more money.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#75

Post by ldayley »

matchagaucho wrote: post #56
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.

Not exactly, the IRS always gets their cut. In traditional IRAs and 401(k) plans taxes are deferred until the retiree begins taking income from their plan (by age 70.5 at the latest or they pay penalties). Those withdrawals are taxed at whatever the person's current tax rate is (often higher than when they were younger). Roth IRAs and Roth 401(k) plans are taxed up front-- there never was a tax deferment for those, but the upside is the contributions aren't taxed when withdrawn, either.

EDIT: Clarity

Re: Rich Retirees Are Hoarding Cash Out of Fear

#76

Post by Artlav »

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…

That is familiar... I'm 30 and i tend to think of my savings in terms of lasting the rest of my life, even though i don't plan to live on them.

I quit a falling apart job a year ago, and was staying above break even on odd opportunities and contracts. At first i pretty much stopped spending anything extra at all, and it was rather unpleasant. A few months in, it kind of passed - as an engineering person it was quite fun for me to make things on minimal budget and fix broken stuff off cheap garage sales.

So, it takes some time to adapt to the change.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#78

Post by anigbrowl »

acover wrote: post #12
macspoofing wrote: post #7

Earlier quoted context omitted.

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 s…

If you saved it with the intention of enjoying it as well as relying on it for financial security and you don't let yourself enjoy any of it, then a lot of the work you did was wasted.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#79

Post by carsongross »

> 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.”

And that right there is where the article tipped over from "dumb" to "evil".

Re: Rich Retirees Are Hoarding Cash Out of Fear

#80

Post by irrational »

djsumdog wrote: post #27
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:/…

> Edward Bernays Sigmund Freud's nephew, who used psychoanalysis to sell products. Freud hated Edward and Anna for going that route. They are the reason more women smoke and why Americas eat bacon for breakfast. If you want to know more, watch The Century of the Self by Adam Curtis.

"They are the reason more women smoke and why Americas eat bacon for breakfast."

So like everyone else they did both good (bacon!) and evil (smoking).

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