Rich retirees are hoarding their fortunes

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If wealthy retired people spent freely within their ability to spend it would help younger people by providing them more jobs, higher incomes, and better lives.  But the rich retired are not spending as they have in the past.  Meanwhile even poorer working young people are paying so the rich retired skinflints can collect Social Security as they simultaneously stockpile their money instead of spending:

Retired people guilty of hoarding their money 

 

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er, that is 5 words.  (or 4 words and a censored expletive!)

RedWolfe01 (May. 23, 2017 @ 3:16p) |

You forgot to add, "And, get off my lawn!"

BostonOne (May. 23, 2017 @ 3:23p) |

I guess, everyone is accountable of their own money and properties. The rich usually let their children inherit all thei... (more)

exclusivesite (May. 24, 2017 @ 12:47a) |

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I thought when you retire, you have less income so you're supposed to be spending less? Why this a problem

Not overspending is a great way to become a rich person.

george2001 said:   Not overspending is a great way to become a rich person.
  what's the point of being rich when you die

rufflesinc said:   
george2001 said:   Not overspending is a great way to become a rich person.
  what's the point of being rich when you die

  If I can't take it with me, I'm not going!

rufflesinc said:   what's the point of being rich when you die
  
Who cares?
It's theirs, what becomes of it is up to them.


grimmy
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george2001 said:   
rufflesinc said:   
george2001 said:   Not overspending is a great way to become a rich person.
  what's the point of being rich when you die

  If I can't take it with me, I'm not going!

  not up to you son

taxmantoo said:   
rufflesinc said:   what's the point of being rich when you die
  
Who cares?
It's theirs, what becomes of it is up to them.

  but you have no say in that if you're dead!

rufflesinc said:   I thought when you retire, you have less income so you're supposed to be spending less? Why this a problem
  Actually when most people retire they have a guaranteed fixed income (SS, at a minimum), which makes it much easier to plan for expenses.  This could mean lowering or it could mean raising spending -- its very easy to determine since the income is fixed and guaranteed (SS anyways).  As opposed to young low wage earners with volatile income who could lose their job at any time.
  That's why its somewhat backwards to give discounts, property tax freezes, etc. solely based on age.  They are primarily paid for by the younger workers with lower incomes, more financial instability, and more financial obligations.

I can relate. My generation (boomer) was told to save, save, save, or we'd be in the poor house and living off cat food. So I did. Now I'm within a year of retirement and I realize I will probably net more in retirement than I did at my working salary. This is ridiculous. I save 40% of my salary now, so clearly I don't need it to live.
While I get that the younger generation would like me to spend it, what exactly am I supposed to be spending it on? If I needed something, I already bought it and I don't need another one, or a newer one. House is paid for. Car is paid for.

The fact that I'll probably die with money left over, isn't really something that I'm going to feel guilt over. Sorry, not sorry.

ledwards said:   I can relate. My generation (boomer) was told to save, save, save, or we'd be in the poor house and living off cat food. So I did. Now I'm within a year of retirement and I realize I will probably net more in retirement than I did at my working salary. This is ridiculous. I save 40% of my salary now, so clearly I don't need it to live.
While I get that the younger generation would like me to spend it, what exactly am I supposed to be spending it on? If I needed something, I already bought it and I don't need another one, or a newer one. House is paid for. Car is paid for.

The fact that I'll probably die with money left over, isn't really something that I'm going to feel guilt over. Sorry, not sorry.

It's your money, do what you want but please be sure to have a plan in place and don't just let the state take it.    

There are many factors in this.

First, you have a life-long habit of saving. Basically, a lot of those (like ledwards mentioned) have been saving very large portions of their incomes throughout all their lives. You get used to living well below your means and you simply don't flip the switch to spending mode the day you retire. You're just not gonna invent new "needs" just because you have money to spare. Or at least many won't.

Secondly, retirement has a lot of uncertainty. You do not control your healthcare spending as much as you'd like to. Especially long-term care could be very expensive. You don't control the economy or the stock market. You depend on government programs that can change quite a bit in the 30 years you may be retired. And as you age, the world looks more and more like an uncertain place with lots of things you don't fully understand around you. Just look at how most people handle tech. Your kids can probably setup your parents phone and computers for them better than they would (maybe even better than you would). And all those uncertainties in the framework of the main uncertainty which is how many years should your nest egg carry you. There's definitely some comfort in under-spending so that you're better protected for worst case scenarii.

Thirdly, many retiree have kids and grandkids they want to leave something to. It's the flip side of those worst-case scenarii. If everything pans out and you die with a lot of money left, well this money should be there to help support your loved ones should they need it. Kinda like being there for them one last time. This is also a life-long habit for any parent so it's hard to shake it. My own attitude is that as long as my estate ends up within the exemption for state and federal estate taxes, any mount of wealth left will not go to waste. It's pretty high currently and if that gets repealed, it won't be much incentive to spend.

And finally, I think that a lot of people are not very financially savvy. Or at least not enough to know that there are products like annuities or longevity insurance that could greatly alleviate their fears of overspending. The FWF boards are a very poor indicator for that but some folks look at MMA or even CDs suspiciously. So don't bother trying to get them interested in exploring their needs for annuities, longevity insurance, or reverse mortgages.

My dad has a problem spending money. After being frugal his whole life and saving considerably now that he's well into retirement he can't seem to bring himself to spend anything to enjoy himself. Old habits die hard.
I don't care if he stimulates the economy with his spending, I"d just like him to not be such a miser and enjoy himself some.

PHX vs. say Houston is an excellent example of this problem. There are more "assets" here but less spending= less discrenetionary economic activity

Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.

shinobi1 said:   If wealthy retired people spent freely within their ability to spend it would help younger people by providing them more jobs, higher incomes, and better lives.  But the rich retired are not spending as they have in the past.  Meanwhile even poorer working young people are paying so the rich retired skinflints can collect Social Security as they simultaneously stockpile their money instead of spending:

Retired people guilty of hoarding their money 

 

  
I see their graphs showing estate sizes of ~$400k. Is $400k retirement what you think of as a dirty rich person?

Because hate to break it to you... but that is pretty broke as far as retirement goes....

Not sure why there is this stigma against retiree's - do we need to pull another article about how everyone is lacking enough assets to effectively retire?

ledwards said:   I can relate. My generation (boomer) was told to save, save, save, or we'd be in the poor house and living off cat food. So I did. Now I'm within a year of retirement and I realize I will probably net more in retirement than I did at my working salary. This is ridiculous. I save 40% of my salary now, so clearly I don't need it to live.
While I get that the younger generation would like me to spend it, what exactly am I supposed to be spending it on? If I needed something, I already bought it and I don't need another one, or a newer one. House is paid for. Car is paid for.

The fact that I'll probably die with money left over, isn't really something that I'm going to feel guilt over. Sorry, not sorry.

  
Clearly you need more H&B

Perhaps people are starting to realize that materialism is a waste and you don't need to spend money to be happy?

scrouds said:   Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.
  A lot if you retire somewhere hot n dry like phoenix

shinobi1 said:   If wealthy retired people spent freely within their ability to spend it would help younger people by providing them more jobs, higher incomes, and better lives.  But the rich retired are not spending as they have in the past.  Meanwhile even poorer working young people are paying so the rich retired skinflints can collect Social Security as they simultaneously stockpile their money instead of spending:

Retired people guilty of hoarding their money 

 

  
so let me get this straight ..
1) these people are living responsibly, lifetime work/savings etc. to build retirement nestegg - just as you're supposed to do
2) they obviously are not taking handouts from govt or anyone else (they are rich)
3)  that is pretty much the dream of posters who comes to financial forum ...

But you want to now blame them for spending not enough?  
And you're blaming them for collecting SS ... which they've paid for?!! 

So should govt mandate how much they should spend now?
 

tennis8363 said:   Perhaps people are starting to realize that materialism is a waste and you don't need to spend money to be happy?
  
or they want to leave something for their kinds or grand kids?

If you were to stop working ... would it not be logical these days and age to live within your means?   I mean people live lot longer these days - people can easily live upto 90 or even 100 years.   

justignoredem said:   
shinobi1 said:   If wealthy retired people spent freely within their ability to spend it would help younger people by providing them more jobs, higher incomes, and better lives.  But the rich retired are not spending as they have in the past.  Meanwhile even poorer working young people are paying so the rich retired skinflints can collect Social Security as they simultaneously stockpile their money instead of spending:

Retired people guilty of hoarding their money 

 

  
I see their graphs showing estate sizes of ~$400k. Is $400k retirement what you think of as a dirty rich person?

Because hate to break it to you... but that is pretty broke as far as retirement goes....

Not sure why there is this stigma against retiree's - do we need to pull another article about how everyone is lacking enough assets to effectively retire?

  Agree!  $400K won't do it for retirement.

I buy anything I want or need in my retirement.  Still do some traveling, but run out of "places to go & see before I die".  But I like to cruise to sites I've seen before just for  sheer relaxation away from home.    
Life is Good but I do keep trying to do wise investments & increase my "pot of gold".     2 children will still have a good inheritance.

 

scrouds said:   Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.
  
Yeah and even standing in your driveway holding a beer while spraying the water hose on the road for no apparent reason is pretty cheap too.
 

jerosen said:   
scrouds said:   Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.
  
Yeah and even standing in your driveway holding a beer while spraying the water hose on the road for no apparent reason is pretty cheap too.

  
But yelling "GET OFF MY LAWN STUPID KIDS!" all day can get kind of tiring on your vocal chords... Perhaps we might need to invest in a voice assistant that can yell for us?

jerosen said:   
scrouds said:   Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.
  
Yeah and even standing in your driveway holding a beer while spraying the water hose on the road for no apparent reason is pretty cheap too.

  not if you live in CA with drought emergency

It's possible I'll have more available in retirement than I really need, going by a simple 3% or 4% rule. But it seems like a time of uncertainty to me too:

I'll have a significant period on my own for health insurance. Regardless of what anyone thinks health care should or will eventually work in the US, I don't feel there's any certainty around that for at least another five years.
When there are stock market drops, I'll be in a much weaker position to take advantage or even recover. While I'm working, I don't need to sell anything and can keep buying at a healthy rate.

The second is somewhat manageable with allocations, but the first doesn't seem to be. I think insurance cost possibilities range from about 10% to 30% of the rest of our budget, and there's no telling when the need for expensive care will add to that even further.

So I don't expect to behave much differently than the guilty described in this article either.

We already have old people using smart phones that they can't comprehend, paying $100 plus for cable that they can't see and buying cars with connectivity that they most likely will never understand. What else do you want them spending their money on?

letsspendlotsofmoney said:   We already have old people using smart phones that they can't comprehend, paying $100 plus for cable that they can't see and buying cars with connectivity that they most likely will never understand. What else do you want them spending their money on?
  a driver!

ledwards said:   I can relate. My generation (boomer) was told to save, save, save, or we'd be in the poor house and living off cat food. So I did.
 

  You are in the minority of your generation.  Most boomers cranked their CCs to the max in the 80s and 90s, paid it off with a 401k loan or home refi, maxed them out again, and will be paying for it til they're 70.  Thus they don't retire and prevent younger folks from moving up the corporate ladder. 

ntr91 said:   
Thus they don't retire and prevent younger folks from moving up the corporate ladder.

 


I've read one description of Social Security's origins as a jobs program. Work was scarce in the recovery from the great depression, SS gave many seniors the option to retire, creating an opening for someone new.

I think this whole line of thinking is a bit backwards / politically motivated.  What you don't spend gets "saved". But that's rarely saved as in "cash under the mattress", but rather invested for retirement.  Buying stocks or bonds or whatnot provides capital to new or existing businesses to further their growth, while investing in savings accounts, CDs, annuities, etc, get you lower returns since you give your money to an intermediary for a promise, and they turn around and invest it similarly.  Even the cash under the mattress helps, in that it's a no-interest loan to the government who printed it so they can blow more money in their budget on handouts, infrastructure projects, or blowing things up.  It all gets put to work, one way or another, it's mostly a question of whether the stewards of the capital do a half way decent job or not in terms of what they invest in.  

rufflesinc said:   
george2001 said:   Not overspending is a great way to become a rich person.
  what's the point of being rich when you die

  What's the point of blowing cash for the sake of blowing it, when it adds little to your enjoyment or well being?

xerty said:     Buying stocks or bonds or whatnot provides capital to new or existing businesses to further their growth, 
  That's not true. When you buy a stock (unless IPO) the money simply goes to the previous owner of the stock. NO money goes to the underlying business.

Glitch99 said:   
rufflesinc said:   
george2001 said:   Not overspending is a great way to become a rich person.
  what's the point of being rich when you die

  What's the point of blowing cash for the sake of blowing it, when it adds little to your enjoyment or well being?

  thats a straw man , not what OP says

rufflesinc said:   
xerty said:     Buying stocks or bonds or whatnot provides capital to new or existing businesses to further their growth, 
  That's not true. When you buy a stock (unless IPO) the money simply goes to the previous owner of the stock. NO money goes to the underlying business.

  That's true and a subtle point, but increased demand for a stock, ie you buying it, does help the company incrementally.  It allows them to more easily issue debt on favorable terms, sell additional equity either in the open market or in a secondary offering for growth capital, use their stock to acquire other businesses in mergers, etc.  There's probably a consumption effect too for big stocks, since everyone appears to be richer when the price of Amazon, Apple, etc, go up.

If you want a retiree's perspective, here's another discussion thread:

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=219015&newp...

points made aside from the obvious ones (risk of running out of money, market crashes, etc) include several faults with the data in the article - it's nominal dollars, so inflation makes the gross estates look bigger when there's possibly no trend at all, and the estate tax reporting cutoffs have increased with the increased exemptions so they aren't sampling as many of the smaller estates as they used to.

in short, it's a dumb premise and a dumb article.

edit: fixed link

Probably not unusual. Today's retireees outside of high COL areas could easily have SS and pensions that cover 100% or more of their basic expenses, with the investments on hold for health or long term care in their final days.

rufflesinc said:   
scrouds said:   Sounds good, but how much does lawn care and a lawn chair cost? Obviously yelling at the kids to stay off the lawn is free.
  A lot if you retire somewhere hot n dry like phoenix

  Not really.  8 months here are gorgeous.    It is middle of the May and temperatures are 77, 86, 89 for next 3 days. I can put up with 3.5 months of heat.

Skipping 134 Messages...
I guess, everyone is accountable of their own money and properties. The rich usually let their children inherit all their properties and its the children already who have full account to their parents money wherein it depends on them how they will spend it. With regards to helping the poor, I believe its the government's problem already wherein they must enact enough laws which are in favor to the poor. But there are also those non-government agencies which are usually consists of a group of rich people at their mid or late ages and are very much willing to help the needy.



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