Many die with almost no financial assets

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RadAudit
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Many die with almost no financial assets

Post by RadAudit »

I came across this MIT study (link is in news article) that reported almost 50% of individuals die with virtually no financial assets.

http://web.mit.edu/newsoffice/2012/end- ... -0803.html

I don't know whether to be happy for them - they didn't leave anything on the table on the way out the door - or sad. The study tried to indicate that those with less money going in to retirement had fewer assets to cope with the shocks of unanticipated health problems and therefore had poorer health later in life.

But, I was fascinated by the "replacement rate" (?) theory. Apparently, even those with sufficient assets to replace (?) their pre-retirement income may be at risk for poorer health later in life if they don't have sufficient funds for unexpected expenses. Of course, folks with more money going in to retirement, had defined benefit pensions and / or annuities, and were married tended to fair better - financially speaking.

Which leads to the question, how much money do you need?
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
chaz
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Re: Many die with almost no financial assets

Post by chaz »

Thanks for the link - interesting article.

Sad that so many don't save enough.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
Rodc
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Re: Many die with almost no financial assets

Post by Rodc »

chaz wrote:Thanks for the link - interesting article.

Sad that so many don't save enough.
Sad truth is if you have very little money when working, you will not have much saved when you retire.

But then if you live on an income with little to no disposable income when working, raising kids, etc., living on just social security is likely not so bad or at least not so different from what you are used to. Many people do it and are fine. (my mother in law for one).

Given that something like 50% don't make enough (under the current tax code) to pay federal income taxes (though they pay many other taxes), I'm not surprised something like 50% run out of money by the end, especially given the often high end of life health care costs.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
xerty24
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Re: Many die with almost no financial assets

Post by xerty24 »

Hard to tell if it's good planning (spend it all while you're alive), or just being poor.
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jebmke
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Re: Many die with almost no financial assets

Post by jebmke »

Many live with almost no financial assets, too. There is still a generation of people who have modest pensions when, combined with social security, provide them with a modest standard of living -- they may not live high on the hog but they get by and are not unhappy. As db pensions disappear or get cut back, I suspect the mix will change.
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serbeer
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Re: Many die with almost no financial assets

Post by serbeer »

They must be real good at "consumption smoothing" that L. Kotlikoff recommends!

:)
MWCA
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Re: Many die with almost no financial assets

Post by MWCA »

I know quite a few who live just on SS. They will be among those who leave nothing behind.
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NYBoglehead
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Re: Many die with almost no financial assets

Post by NYBoglehead »

Some people cannot save money, and for those I feel bad. The problem is, I know a lot of people like my father, who never made a ton of money, but always lived on less than he made, who are now living comfortably in retirement.

No matter how much money you make, if you live on less than you make and invest the rest you have a reasonable shot at a good retirement. If only the media/others didn't convince us that this wasn't possible more people would be better off.
fareastwarriors
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Re: Many die with almost no financial assets

Post by fareastwarriors »

MWCA wrote:I know quite a few who live just on SS. They will be among those who leave nothing behind.
Yup.
Wagnerjb
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Re: Many die with almost no financial assets

Post by Wagnerjb »

NYBoglehead wrote:Some people cannot save money, and for those I feel bad. The problem is, I know a lot of people like my father, who never made a ton of money, but always lived on less than he made, who are now living comfortably in retirement.

No matter how much money you make, if you live on less than you make and invest the rest you have a reasonable shot at a good retirement. If only the media/others didn't convince us that this wasn't possible more people would be better off.
:thumbsup :thumbsup

Well said. We need to continue the push to educate people about financial discipline and planning. Sadly, the media feeds us a constant drumbeat of "its not their fault", and they serve to weaken the spirit of self responsibility.
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john94549
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Re: Many die with almost no financial assets

Post by john94549 »

I thought the point of the SWR was to do just that. Reminds me of the parable of the wine collector with an abundant cellar. Gave lavish parties, all with his best vintages. Died with one bottle left. But the kids got the house with the cellar. Not a bad estate plan, when you think of it.
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mlebuf
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Re: Many die with almost no financial assets

Post by mlebuf »

Some people are savers and some aren't. It's that simple and accounts for most of the differences in wealth at retirement, according to a 2000 NBER study. You can read the summary of the study here: http://www.nber.org/papers/w7521
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FillorKill
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Re: Many die with almost no financial assets

Post by FillorKill »

The spend-down tactic used to qualify for Medicaid-funded senior services also muddies the water to an unknowable degree...
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Toons
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Re: Many die with almost no financial assets

Post by Toons »

NYBoglehead wrote:Some people cannot save money, and for those I feel bad. The problem is, I know a lot of people like my father, who never made a ton of money, but always lived on less than he made, who are now living comfortably in retirement.

No matter how much money you make, if you live on less than you make and invest the rest you have a reasonable shot at a good retirement. If only the media/others didn't convince us that this wasn't possible more people would be better off.
+1, I agree completely,so far its worked for me (retired) :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Rodc
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Re: Many die with almost no financial assets

Post by Rodc »

BlackBeltLurker wrote:The spend-down tactic used to qualify for Medicaid-funded senior services also muddies the water to an unknowable degree...
Good point.

A distinct disincentive to maintain a positive account balance for savers with modest savings.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
BYUvol
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Re: Many die with almost no financial assets

Post by BYUvol »

RadAudit wrote: I don't know whether to be happy for them - they didn't leave anything on the table on the way out the door - or sad.
It doesn't matter if you are Athiest, Agnostic, Christian, Jew, Muslim... No one believes those people, who are dead, have any use for their assets after expiration, so I don't think you need to be happy or sad, it just is what it is.

The only scenario that I can think of where it would be beneficial to have assets one minute before death is if those assets could afford some medical treatment that would prolong your life in a meaningful way, that medical professionals would otherwise be unwilling to give. I hope to leave some money to my children when I pass on, but if I can't, they will get on just fine.
SteveB3005
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Re: Many die with almost no financial assets

Post by SteveB3005 »

....almost 50% of individuals die with virtually no financial assets.
I was surprised the number was not higher, given the ones who never had it, the ones who gifted it out, and the ones who shielded it from social services. I'm of the ilk that more should have spent it along the way and that the Irish have it right with the saying, " Only a fool dies solvent."
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graveday
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Re: Many die with almost no financial assets

Post by graveday »

One guy back in history said no money is needed and if you have two coats, give one away.
allsop
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Re: Many die with almost no financial assets

Post by allsop »

SteveB3005 wrote:
....almost 50% of individuals die with virtually no financial assets.
I was surprised the number was not higher, given the ones who never had it, the ones who gifted it out, and the ones who shielded it from social services. I'm of the ilk that more should have spent it along the way and that the Irish have it right with the saying, " Only a fool dies solvent."
The balance between saving and spending is very much a personal decision, but I do not want my family to be destitute if I die outside of schedule.
SteveB3005
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Re: Many die with almost no financial assets

Post by SteveB3005 »

^ I'm thinking the saying was meant in a figurative sense and is speaking to old age. For myself, balance is good and I take pride in being a good provider, but am in no way affiliated with the "save till' it hurts" school.
allsop
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Re: Many die with almost no financial assets

Post by allsop »

^ We agree then :-)
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