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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

#131

Post by cvwright »

ransom1538 wrote: post #81
dsmithatx wrote: post #61

My grandfather worked at Exxon Mobile for 60 years and retired around 1988 with a few million dollars in stock. I remember my dad saying he had about 3 Million in stock he purchased as his retirement plan. He built a house and bought a couple of nice cars living on about 100,000 a year. About 12 years ago he had a heart attack and stroke and was bed ridden. 12 years of doctor bills and hospice ate through almost ever…

Whatever you save with your blood, sweat and tears (if you are lucky) will be blown on medical expenses. The trick is to convert to cash (literal), then give it to your wife, convert medical expenses to debt and die.

That's not necessarily the only option. Long-term care insurance claims to address this problem. (Whether it actually does or not, I'm not qualified to answer.)

Re: Rich Retirees Are Hoarding Cash Out of Fear

#132

Post by pkaye »

stupidhn wrote: post #104
Artlav wrote: post #97

Earlier quoted context omitted.

Why are buildings built with 3 times the structural integrity than they need? Why are wires several times thicker than they need to carry the power the house needs? Why are hammers much harder than nails? It's called redundancy - you can never predict exactly what the needs would be, so you leave a healthy safety margin.

Overdoing any of each of your examples is a waste of resources, just like dying with a pile of cash.

Nobody can predict far ahead so there is no correct amount to save. I thought I was saving at a good rate but recently came with a chronic healthy issue that may make it difficult to work for a long time. In hindsight I should have saved more aggressively.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#133

Post by __jal »

djrogers wrote: post #24
gedy wrote: post #8

Earlier quoted context omitted.

I'd be comfortable 'spending my money' in a future retirement if the retirement could generate decent passive income. As it stands, though, it's looking like many folks like me will have to work until we die and/or save enough to burn with just living and healthcare costs.

Do you foresee medicare failing? Also, what's stopping you from setting up your retirement such that you do have passive income?

> Do you foresee medicare failing?

I see a non-zero chance that it won't be there when I reach retirement age in ~20 years.

These days, the US political climate is looking far friendlier to those who want to destroy wealth transfers that benefit the non-rich.

Also, the US political establishment in general is looking substantially less stable than it did 20 years ago. That's not to say it is going to break down in a year or five. But I do think making bets on it should only be done with money you don't need.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#134

Post by incompatible »

reustle wrote: post #101
ransom1538 wrote: post #81

Earlier quoted context omitted.

Whatever you save with your blood, sweat and tears (if you are lucky) will be blown on medical expenses. The trick is to convert to cash (literal), then give it to your wife, convert medical expenses to debt and die.

The trick is to move to a country with proper healthcare

Most countries with decent healthcare are reluctant to accept retirees. They'll likely have to fund their own health insurance, at least. If you can gain citizenship of such a country, well in advance of retirement, it could be well worth it though.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#135

Post by kevin_thibedeau »

stupidhn wrote: post #104
Artlav wrote: post #97

Earlier quoted context omitted.

Why are buildings built with 3 times the structural integrity than they need? Why are wires several times thicker than they need to carry the power the house needs? Why are hammers much harder than nails? It's called redundancy - you can never predict exactly what the needs would be, so you leave a healthy safety margin.

Overdoing any of each of your examples is a waste of resources, just like dying with a pile of cash.

You can engineer wiring to be the right size for the 99% use case. You can't do that with savings.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#136

Post by cylinder »

drblast wrote: post #85

This is a really good argument for subsidized medical care. This fear of not having enough for medical expenses is perfectly reasonable, and I wouldn't fault sometime for hoarding cash for a second. Solve the inherited inequality problem with inheritance taxes or guarantee medical care. Otherwise of course people will save for medical expenses. And they should, it's prudent.

Retirees do have Medicare though, but with any socialized medical system you won't be covered for everything

Re: Rich Retirees Are Hoarding Cash Out of Fear

#137

Post by incompatible »

msabalau wrote: post #54
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.

To me it seems that getting a decent return was a lot easier prior to 2007. Banks would pay interest rates of 6% or so and inflation was low. The stock market only gradually became overvalued.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#138

Post by ams6110 »

dsmithatx wrote: post #61

My grandfather worked at Exxon Mobile for 60 years and retired around 1988 with a few million dollars in stock. I remember my dad saying he had about 3 Million in stock he purchased as his retirement plan. He built a house and bought a couple of nice cars living on about 100,000 a year. About 12 years ago he had a heart attack and stroke and was bed ridden. 12 years of doctor bills and hospice ate through almost ever…

> Maybe people 60 should not be so fast to go spend their cash. He was 72 when he got sick and 84 this year when he finally passed away.

Also have a living will that specifies no heroic measures so you won't languish in a hospital bed for years while squandering all your life savings

Re: Rich Retirees Are Hoarding Cash Out of Fear

#139

Post by Gustomaximus »

I feel this is another down-stream effect of weak social support. If a country offers reasonable basic pension and healthcare, retirees will spend because they know if they run out of cash they have their basics covered. Without this support of course they will hoard money.

I saw this living in Norway where people in general tend to save less aggressively because they know if things go bad they are covered. And it worries me in my country of Australia where we are following the US model of ever reducing social services. It makes great short term savings but I feel there are these kind of longer term effects we pay the price for. And these effects are hard for many people to consider when its that far ahead so politically it is unlikely to change.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#140

Post by ashark »

tunesmith wrote: post #122
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:/…

On the other hand, I've had a couple of experiences where I've grudgingly spent money on something, and then felt, "Oh my god, why didn't I do this sooner? It would have helped my quality of life." Not just as luxuries, but in ways that freed me up to feel more productive or healthy. For instance (all of this assumes you have the money to do so), a bookkeeper for your small business. A CPA for your taxes. A lawn serv…

Those belts that ratchet (Slidebelts?). Electric toothbrush (yes, really). Decent-to-good leather shoes. Wool socks. Button fly jeans. Rice cooker.

[EDIT] my belt says "Trak Line"

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