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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

#151

Post by mannykannot »

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.

Spending the last years of your life worrying about how you will make ends meet is not an appealing option. Of course, if you set an end date for your lifetime, you can better plan ahead, but I have only known one person who voluntarily followed through on that plan, and it was a lifestyle choice with its own downsides.

There is an inherent asymmetry between living somewhat more frugally and dying in poverty.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#152

Post by georgeecollins »

There are two tracks in America. On one track are people with almost no net worth who will depend on social security and their homes, if they own one, for retirement savings.

The other track is people who actually read articles about retirement savings. They are a smaller group, often getting the advice meant for the former. They constantly hear that Americans don't save enough for retirement. The financial industry is constantly saying people aren't saving enough, in media venues that appeal to the affluent who don't really need that advice. But the more those affluent invest the more commissions they collect. So they stoke the anxiety to those who shouldn't feel anxious.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#153

Post by martin1975 »

was_boring wrote: post #150
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.

I'm currently in a similar situation about what to do with an elderly relative with dementia who is currently in limbo after the last relative taking care of him died. The best moral option is to take guardianship and look after him. The best financial decision is to "divorce" from the situation and let the state take care of him so I have a chance of my wife and I being able to retire and saving for the kid's educat…

You know the Golden rule, no? It's as true as 2+2=4.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#154

Post by mannykannot »

anigbrowl wrote: post #69
toomuchtodo wrote: post #25

Earlier quoted context omitted.

I am absolutely worse off if I run out of money before I die, whereas its only a minor inconvenience if I don't happen to spend down my estate to zero before death (in my case, it will flow to my wife and/or daughter). EDIT: I will live frugally and drastically below my means forever (and I'm only 34!) while putting aside substantial savings; the fear of running out of funds in the last part of my life is terrifying.…

Fallacy of the excluded middle, nobody suggested that people should be spending themselves into penury. This is a great argument for universal healthcare though.

I don't think anyone is suggesting it is a dichotomy; they are pointing out that the value function is not linear.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#155

Post by firebones »

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…

(Edit: never mind. I think there's some mistake in your chronology that renders my numbers invalid. Died at 84 in 2017 == born in 1933. Retired in 1988 at age 55, probably not after 60 years at XOM, more like 30; or retired after 60 years, probably more like 1933+18+60=2011. Guessing maybe he retired at age 60 in 1993? Got sick at 72 in 2005? Died at 84? The numbers change a bit--missed out some big gains in 1988 and 1989, hit the flat 2000s, and probably got creamed by having to cash a lot out during 2008 crash.)

What I was going to post based on your original report of retiring in 1988 with $3M (keeping it for illustrative purposes):

He must have sold the stock when he retired to buy that house and those cars. Had he kept it in XOM, his $3 million would have been worth $22 million today, with a dividend that would have covered his expenses and that kept pace with inflation.

Not that keeping your nest egg in a single stock would have been advisable, but the S&P return for that would have been comparable.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#156

Post by redahs »

eveningcoffee wrote: post #118
beambot wrote: post #20

Earlier quoted context omitted.

What about peace of mind & financial stability? Those don't decline over time... (Also: Estate tax as a way to fund basic income?)

Taxing property means that owner must have cash to pay for it or is forced to sell it (with all the consequences of forced selling probably). It may sound interesting and promising but is most likely the most unjust way of taxing as it will force people are retired or about to retire out of their homes (that they are not paid for using funds from the basic income).

A land value tax would be far better than either an estate tax or a real-estate property tax. It is only assessed against the unimproved value of the ground one has enclosed and excluded others from occupying, and not against the value of improvements which have been constructed and maintained.

While the consequences of non-payment would also be forced sale, it is possible for residents to petition and sue the to assessor's office in order to reassess the value and obtain deferments, and the owners are still compenseated for the value of any real property located on the site. This is more just than an income tax, as failure to pay could never result in imprisonment.

Additionally, it would lead to far lower cost of housing, mortgages, and rent. This means less savings and income would have to be allocated toward acquiring the house in the first place. It would also be more just to those who are not wealthy enough to buy a house outright, and must instead rent or obtain a mortgage.

When spending on public services increases the land values and attractiveness of the location for which these services apply, and is financed via taxes on labor rather than taxes on land, this subsidizes land holders and banks invested in mortgages by allowing them to charge higher rent for housing.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#158

Post by lutorm »

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.

Exactly. In the absence of a socialized health care system, each individual is forced to plan for the worst case rather than the average case.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#159

Post by Theodores »

meddlepal wrote: post #112
blhack wrote: post #55

Earlier quoted context omitted.

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…

Question... how did your back feel sleeping on a hammock for a year?

Hammocks are not a problem for the back just so long as there is sufficient tension in the strings and that the hammock does not hang too low. You sleep with your feet up - good after a day on your feet - and, because your body weight pulls the hammock straight, you have a very well supported and straight back.

Once in a hammock there is no 'swaying', the feeling is more like being in a flotation tank. If you have enough duvet, pillows, blankets and the like you can sleep in other positions and move with relative ease.

I badly pulled a calf muscle once and spent a fortnight getting back to strength, given the option of a normal double bed or a hammock slung above, I found at the hammock provided me with the sleep I could not get in the normal bed below.

Sadly I had to move from that attic room and I lost the anchor points needed for the hammock. I believe a hammock offers better support and comfort for a back.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#160

Post by georgeecollins »

toomuchtodo wrote: post #25
bradleyjg wrote: post #14

Earlier quoted context omitted.

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.

I am absolutely worse off if I run out of money before I die, whereas its only a minor inconvenience if I don't happen to spend down my estate to zero before death (in my case, it will flow to my wife and/or daughter). EDIT: I will live frugally and drastically below my means forever (and I'm only 34!) while putting aside substantial savings; the fear of running out of funds in the last part of my life is terrifying.…

People used to run out of money all the time when they were old. A hundred years ago in America most elderly were very poor and taken care of by their families. Now poverty is more concentrated in homes with young children. That sounds more comfortable to me, as an adult professional, but is it better for society?
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