Retirees afraid to spend? (Bloomberg)

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Beast_Monster
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Retirees afraid to spend? (Bloomberg)

Post by Beast_Monster »

Interested in the forums thoughts, particularly near- or post-retirees, on the conclusion of this Bloomberg article (good data & perspectives):
Financial planners need to help retirees realize they have a “cognitive bias” that makes them too gloomy about the future, said United Income’s Fellowes. Survey data often show older Americans are less optimistic about financial matters then younger people. Fellowes analyzed the data further and found this optimism gap has been widening over the last four decades.

Even as retirees live longer, healthier lives, they’ve become more pessimistic about the economy, the stock market, and their own financial situation.

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.”

https://www.bloomberg.com/news/articles ... ut-of-fear
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Re: Retirees afraid to spend? (Bloomberg)

Post by Sheepdog »

I haven't read the article, but I think I understand. One reason is that more and more and more retirees no longer have a guaranteed pension to protect them, so if they screw up their investments and don't watch their spending, they may reach old age with nothing.
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Re: Retirees afraid to spend? (Bloomberg)

Post by livesoft »

It's a manifestation of the alternative gloom & doom facts that these folks see in their daily intake of media. Previous generations were blissfully unaware of unimportant noise and hysteria.
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Retirees are hoarding cash

Post by RadAudit »

[Thread merged into here, see below. --admin LadyGeek]

I saw this on Bloomberg.

https://www.bloomberg.com/news/articles ... ut-of-fear

It seems that some of the reasons for hoarding cash - not spending as much as we "should" - is the fear of running out of money for medical expenses, etc. Easy for the writer to say - he doesn't have to live with the consequences of guessing wrong - unless he's fully prepared to support his old, destitute parents for the duration.

Still, with the debate here on the board on SWRs (2%, 3%, 4%, etc.) creating a great deal of uncertainty, just let me know how much it'll cost and how long my DW and I have left to go and we'll spend it.
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Re: Retirees are hoarding cash

Post by EHEngineer »

Nothing about "cash" in that article. You correctly identified that they are discussing spend rate would-a/could-a/should-a. Spoiler alert, people don't want to run out of assets in old age, and people generally don't like SPIAs.
Or, you can ... decline to let me, a stranger on the Internet, egg you on to an exercise in time-wasting, and you could say "I'm probably OK and I don't care about it that much." -Nisiprius
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Re: Retirees are hoarding cash

Post by fposte »

Yeah, that article's kind of weird. "Other studies have found affluent older Americans hoarding money. Last year, a study in the Journal of Financial Planning found that the wealthiest fifth of U.S. retirees were spending 53 percent less than they could have. Meanwhile, the poorest 40 percent generally spend more than they safely should; the median retiree spent about 8 percent less than the safe amount."

So people spend based on what they need or wish to spend, not just on what somebody feels they could spend. That's not hoarding money.
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Re: Retirees are hoarding cash

Post by freebeer »

I'm not entirely sure I believe there is any trend. The only actual data discussed was:

"United Income analyzed the estates of people who died between 2000 to 2002, and compared them with those who died between 2010 to 2012. Although the later group had just lived through a financial crisis and worldwide recession, their estate values were 130 percent higher."

United Income has an explicit agenda so that makes the odd choice of year ranges smell even more of cherry-picking, with the whole article somewhat a PR puff piece for them. As well it is not mentioned whether this was nominal dollars or what and - surprise! $1 in 2000 became $1.29 in 2010. So this could even be just down to inflation.

Of course, as well, we know that there has been a significant trend away from defined-benefit pensions so one would expect as well that, especially as we also know people under-annuitize, a natural increase in estate values since without mortality credits one must save for potential longevity. Again the choice of year ranges here could have been to maximize this effect, with many more 2000 decedents having had pensions than 2010 decedents.

That retirees under-spend is of course well understood - my question is only whether there is any actual change in behavior going on, other than a) inflation and b) decline of pensions.
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Re: Retirees are hoarding cash

Post by Da5id »

EHEngineer wrote:Nothing about "cash" in that article. You correctly identified that they are discussing spend rate would-a/could-a/should-a. Spoiler alert, people don't want to run out of assets in old age, and people generally don't like SPIAs.
I think in the article "Cash" is shorthand for "liquid assets of any type". Mind you, I love the quote in the article:
“We found that even in a worst-case scenario, they could have spent more,”
I find that so disingenuous. Back-testing is lovely and all. However a current retiree with maybe 30 years ahead of them has no idea what the "worst" case scenario is. Maybe it is 2008 but the government interventions don't cut it and the banks are all failing. Maybe it is 1929. Maybe it is even worse. You can't judge based on the past what "worst" is prospectively. And forgetting the market, for many with some assets the "worst" modestly likely case is probably extended LTC for one spouse.

It is easy to be glib about how much folks should be spending, but I'm pretty sympathetic to the desire to not run out of money come what may. Hence I'm targetting < 3% initial spend in early retirement. I guess that will make me one of those "bad" retirees who aren't spending enough.

Mind you, maybe some of the retirees just have lead a modest lifestyle and don't feel like changing their habits now. They could afford first class and the new iPhone every year, but that just isn't what they do. Maybe they like Grey Poupon...
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Re: Retirees are hoarding cash

Post by mac808 »

Wouldn't the 2009 financial crisis be expected to create another mini generation of "depression era" folks?
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Re: Retirees are hoarding cash

Post by Ron »

RadAudit wrote:<snip...> Still, with the debate here on the board on SWRs (2%, 3%, 4%, etc.) creating a great deal of uncertainty, just let me know how much it'll cost and how long my DW and I have left to go and we'll spend it.
"Back in the old days" (of my parents/grandparents generations), a life pension from a job along with SS meant that you could spend 100% of your income, if you wished, until the day you died.

They didn't have to worry about income in their respective retirements. Neither did I until my pension was eliminated at age 34 and I had to learn much about the new way of preparing for retirement via 401(k)'s/IRA's at a time that very few (if any) folks knew what was required or even how to use these investment vehicles.

Along with the vast majority of folks not even having enough saved/invested (per the popular press), I can see that retired folks (including me) are hesitant to spend outside their respective level of financial comfort.

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Re: Retirees are hoarding cash

Post by The Wizard »

A key point: Suddenly not getting a paycheck, so afraid to spend.
This clearly is worse for people who take an asset approach vs an income + asset approach.
So when the next crash happens, you'd expect the former to cut back to spending SS only, I guess.

Arrange for a healthy income in retirement and you'll be fine. That may involve using an insurance company...
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Re: Retirees are hoarding cash

Post by The Wizard »

Ron wrote:
RadAudit wrote:<snip...> Still, with the debate here on the board on SWRs (2%, 3%, 4%, etc.) creating a great deal of uncertainty, just let me know how much it'll cost and how long my DW and I have left to go and we'll spend it.
"Back in the old days" (of my parents/grandparents generations), a life pension from a job along with SS meant that you could spend 100% of your income, if you wished, until the day you died...
Exactly.
So how do we replace that pension?
The answer isn't too hard...
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Re: Retirees are hoarding cash

Post by stinkycat »

I wonder how much of this is behavioral. I don't spend as much as a could while I am working. Once I retire, I will probably spend less than I could then as well. It might just be a matter of temperament.
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Re: Retirees are hoarding cash

Post by Vanguard Fan 1367 »

For sure when you are a Boglehead you have to be prepared for your index funds to drop at least 50 percent at any time and you need to be prepared to not get excited and sell when they are down. So I can sympathize with folks being a bit financially conservative. The great John Bogle doesn't predict as nice a stock market going ahead as we had from 1982 to the present.
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Re: Retirees are hoarding cash

Post by dodecahedron »

freebeer wrote:I'm not entirely sure I believe there is any trend. The only actual data discussed was:

"United Income analyzed the estates of people who died between 2000 to 2002, and compared them with those who died between 2010 to 2012. Although the later group had just lived through a financial crisis and worldwide recession, their estate values were 130 percent higher."

United Income has an explicit agenda so that makes the odd choice of year ranges smell even more of cherry-picking, with the whole article somewhat a PR puff piece for them. As well it is not mentioned whether this was nominal dollars or what and - surprise! $1 in 2000 became $1.29 in 2010. So this could even be just down to inflation.
Another questionable data issue: I would imagine that United Income used the most easily accessible database of estate values, which comes from IRS estate tax filings, but there were many relatively small estates required to file estate tax returns in 2000-2002 that would not have been required to file returns in 2010-2012 due to the greatly increased estate tax exemption amounts during the intervening decade.
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Re: Retirees are hoarding cash

Post by BW1985 »

fposte wrote: So people spend based on what they need or wish to spend, not just on what somebody feels they could spend. That's not hoarding money.

+1. People who save diligently their entire lives to have the assets they do are not going to blow it all in retirement on consumer spending. I don't need to read an article to tell me that.
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Re: Retirees are hoarding cash

Post by The Wizard »

stinkycat wrote:I wonder how much of this is behavioral. I don't spend as much as a could while I am working. Once I retire, I will probably spend less than I could then as well. It might just be a matter of temperament.
I do something like that even though my retirement income is a bit more than when working. But I have more mid-range expenses now, such as travel and new vehicles, so need to save so I can pay cash...
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Re: Retirees are hoarding cash

Post by nisiprius »

"Hoarding cash" is highly loaded language. It's probably not "cash," and "hoarding" is one of the most negative-sounding words you could use to describe what they are doing. As for a chart like this,
Image
if the implication is that these people are doing something wrong, it's not so. In fact it's the logical consequence of doing what investment firms probably want you to do: finance your retirement from a portfolio, rather than purchasing an income annuity. Spending all of your retirement money on yourself is an insoluble problem for an individual. If you budget your spending prudently to last into a ripe old age, should you be fortunate enough to live that long, then it follows logically that you'll have something like half of it left if you only live to an average age.

Many of us would like to live so that "the check to the underwriter undertaker bounces." If that's what you want do to, you can do it by buying an income annuity. There's no way to do it by spending from an individual portfolio, because you don't know how long you will live. That's not a detail, if you look at the numbers the uncertainty is huge, I mean a factor of two or three, and it doesn't decrease with age.

Let's be clear on this. The higher your spending rate, the higher your risk of running out. And once again, I'm not sure why, there seems to be a drumbeat of articles saying, simply, "your risk tolerance is wrong. You need to be trained to take more risk."

There's a lot of "cheerful" talk being published lately, under the guise of sound advice, along the lines of "eat, drink and be merry, for tomorrow you die." Scott Burn's "hedonic tilt." A recent article by Meir Statman asserting baldly "you'll die sooner than you think." And now this. We need to train seniors to be optimistic, because there is an objectively correct level of optimism we should have, and old people are wrong and younger people are right.

Image
Last edited by nisiprius on Tue May 16, 2017 11:41 am, edited 1 time in total.
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Re: Retirees afraid to spend? (Bloomberg)

Post by bertilak »

As a retiree I think I am affected by a similar condition.

I keep waiting for things to "settle down" before making any expensive plans. After 6+ years things have just not settled down!
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Re: Retirees afraid to spend? (Bloomberg)

Post by Vanguard Fan 1367 »

livesoft wrote:It's a manifestation of the alternative gloom & doom facts that these folks see in their daily intake of media. Previous generations were blissfully unaware of unimportant noise and hysteria.
I am sort of a doom and gloom guy. If you wanted that you could always find it, such as Howard Ruff and his Ruff Times Newsletter, or Larry Burkett talking about "The Coming Economic Earthquake." I find my life happier if I mostly avoid the news.
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Re: Retirees are hoarding cash

Post by littlebird »

freebeer wrote:I'm not entirely sure I believe there is any trend. The only actual data discussed was:

"United Income analyzed the estates of people who died between 2000 to 2002, and compared them with those who died between 2010 to 2012. Although the later group had just lived through a financial crisis and worldwide recession, their estate values were 130 percent higher."

United Income has an explicit agenda so that makes the odd choice of year ranges smell even more of cherry-picking, with the whole article somewhat a PR puff piece for them. As well it is not mentioned whether this was nominal dollars or what and - surprise! $1 in 2000 became $1.29 in 2010. So this could even be just down to inflation.

Of course, as well, we know that there has been a significant trend away from defined-benefit pensions so one would expect as well that, especially as we also know people under-annuitize, a natural increase in estate values since without mortality credits one must save for potential longevity. Again the choice of year ranges here could have been to maximize this effect, with many more 2000 decedents having had pensions than 2010 decedents.

That retirees under-spend is of course well understood - my question is only whether there is any actual change in behavior going on, other than a) inflation and b) decline of pensions.
. . . and I would add c) increased income inequality. Statistics skewed by very wealthy individuals who have much more than they want or need to spend and are conserving it for their heirs.
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Re: Retirees afraid to spend? (Bloomberg)

Post by The Wizard »

bertilak wrote:As a retiree I think I am affected by a similar condition.

I keep waiting for things to "settle down" before making any expensive plans. After 6+ years things have just not settled down!
I'm not sure what you mean by expensive plans...
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Re: Retirees afraid to spend? (Bloomberg)

Post by Big Dog »

Even as retirees live longer.... lives, they’ve become more pessimistic about .... their own financial situation.
It seems to me that such is a logical conclusion. No one wants to outlive their cash, and as noted earlier, defined benefit pension plans have gone away for the masses.
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Re: Retirees afraid to spend? (Bloomberg)

Post by bertilak »

The Wizard wrote:
bertilak wrote:As a retiree I think I am affected by a similar condition.

I keep waiting for things to "settle down" before making any expensive plans. After 6+ years things have just not settled down!
I'm not sure what you mean by expensive plans...
  • Travel
  • Home Improvements
  • Finish the wife's koi pond
  • Fancy car
  • Pickup truck (always seem to need one. Occasionally borrow or pay delivery charge.)
  • Gifts
  • Trust funds for grandkids
  • Decent greenhouse
  • Stop me!
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Re: Retirees afraid to spend? (Bloomberg)

Post by DetroitRick »

As a younger retiree, yes, I can really relate to this. Starting to draw on retirement savings was a bit harder (mentally) than I expected. From everybody I talk to, it's a pretty common phenomenon in this phase of life. Even my Schwab rep echoed how frequently his clients experience this.

I expect it to get easier for me over the next few years - both with my own time/experience building, and with the start of my social security. But at least before I started my regular drawdowns, I first had the experience of helping a few friends and relatives with theirs. It just personalized the experience and prepared me a bit more for my own strategy. Anyway, I'm reasonably confident in my overall path, but just have that small nagging feeling sometimes.

Having a great ongoing handle on my finances and spending needs definitely helps mitigate this for me. On the other hand, the constant headline blare detracts. Things like over-the-top asset base requirements and some of the more absurd safe withdrawal rate discussions (do I hear under 2% anyone :D ). It probably doesn't help that many of the "experts" in these matters also have a direct incentive to create uncertainty (more clients, more readers, etc.). Fear always sells.

I was listening to a couple of (horrid) retirement planning shows on the radio this weekend just for kicks. Extremely low substance, high fear, and simplistic thinking. No wonder folks worry. I think we will being hearing about this spending fear for the foreseeable future. On the brighter side, part of it relates to living longer.
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Re: Retirees are hoarding cash

Post by AlwaysBeClimbing »

From the article:
"While younger generations get poorer, older Americans can’t seem to spend it all."
~
"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.”"
Just more "shop till you drop" blather. If you feel the need to tell people they need to jettison more of their money, how about suggesting they give some of the "excess" wealth those ever poorer younger generation types, either through gifting, charities or some such. Spending it on what are likely going to be white elephants just to reduce the pile is a specious argument at best. If people really wanted second homes, fancy cars, etc. they'd have already bought them, coaching not required.
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Re: Retirees are hoarding cash

Post by IMO »

Looking at the graph in the article, the amount was $300K in their estate for various ages. Is that all liquid funds or did that include their house?

So what they had $300K when they died. If they were getting or planning on long term care costs, that wouldn't last that long.

And who can predict when they are going to die?
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Re: Retirees are hoarding cash

Post by delamer »

Only on Bogleheads would this typo occur :wink:

Many of us would like to live so that "the check to the underwriter bounces."
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Re: Retirees are hoarding cash

Post by nisiprius »

delamer wrote:Only on Bogleheads would this typo occur :wink:

Many of us would like to live so that "the check to the underwriter bounces."
Not original, I'm afraid, which is why I put it in quotes, but I can't find the place I first saw it. It was a serious book about retirement planning, published in 1998 or thereabouts, but the title escapes me. It wasn't "Spend Till the End" which is a real book, much later, by different people.
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Re: Retirees are hoarding cash

Post by nisiprius »

nisiprius wrote:
delamer wrote:Only on Bogleheads would this typo occur :wink:

Many of us would like to live so that "the check to the underwriter bounces."
Not original, I'm afraid, which is why I put it in quotes, but I can't find the place I first saw it. It was a serious book about retirement planning, published in 1998 or thereabouts, but the title escapes me. It wasn't "Spend Till the End" which is a real book, much later, by different people.
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Re: Retirees afraid to spend? (Bloomberg)

Post by Watty »

I looked at the website of the company that was mentioned, United Income. It was a more than a bit vague as to what they do but it reeked of annuity sales or something similar.

In the article it said;
Other studies have found affluent older Americans hoarding money. Last year, a study in the Journal of Financial Planning found that the wealthiest fifth of U.S. retirees were spending 53 percent less than they could have. Meanwhile, the poorest 40 percent generally spend more than they safely should; the median retiree spent about 8 percent less than the safe amount.
So basically the article is about how portfolios the top 20% of retirees are more than large enough to support their spending so they are "hoarding money".

That was a pretty worthless article.
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Re: Retirees are hoarding cash

Post by penumbra »

nisiprius wrote:"Hoarding cash" is highly loaded language. It's probably not "cash," and "hoarding" is one of the most negative-sounding words you could use to describe what they are doing. As for a chart like this,
Image
if the implication is that these people are doing something wrong, it's not so. In fact it's the logical consequence of doing what investment firms probably want you to do: finance your retirement from a portfolio, rather than purchasing an income annuity. Spending all of your retirement money on yourself is an insoluble problem for an individual. If you budget your spending prudently to last into a ripe old age, should you be fortunate enough to live that long, then it follows logically that you'll have something like half of it left if you only live to an average age.

Many of us would like to live so that "the check to the underwriter bounces." If that's what you want do to, you can do it by buying an income annuity. There's no way to do it by spending from an individual portfolio, because you don't know how long you will live. That's not a detail, if you look at the numbers the uncertainty is huge, I mean a factor of two or three, and it doesn't decrease with age.

Let's be clear on this. The higher your spending rate, the higher your risk of running out. And once again, I'm not sure why, there seems to be a drumbeat of articles saying, simply, "your risk tolerance is wrong. You need to be trained to take more risk."

There's a lot of "cheerful" talk being published lately, under the guise of sound advice, along the lines of "eat, drink and be merry, for tomorrow you die." Scott Burn's "hedonic tilt." A recent article by Meir Statman asserting baldly "you'll die sooner than you think." And now this. We need to train seniors to be optimistic, because there is an objectively correct level of optimism we should have, and old people are wrong and younger people are right.

Image
Did you mean that "the check to the undertaker bounces?" :greedy
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Re: Retirees are hoarding cash

Post by NotWhoYouThink »

Oh. I thought it was just BH humor.

Maybe it is an eggcorn.
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Re: Retirees are hoarding cash

Post by celia »

The title says it all: Rich Retirees Are Hoarding Cash [Out of Fear]

It you don't have lots of cash or equivalents, then you aren't rich are you? If "Rich Retirees" spend all their money, they aren't Rich Retirees, are they?

As far as that flaky graph, where did they get their data? I bet they didn't include all the poor or in-debt people in the survey if the article is only about Rich Retirees. I would have preferred to see what percentage of the population died broke and see what their average debt was. I particularly want to see how many died right when their money ran out. (How did they do that? Could someone go interview them? :oops: )
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Re: Retirees are hoarding cash

Post by Grt2bOutdoors »

It was less of an article and more of "we need to increase consumerism, financial planners should emphasize advising their older customers to go out and purchase second home and luxury cars". :oops: It was a shill piece for consumerism, since the younger generation isn't spending it.
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Re: Retirees are hoarding cash

Post by delamer »

nisiprius wrote:
nisiprius wrote:
delamer wrote:Only on Bogleheads would this typo occur :wink:

Many of us would like to live so that "the check to the underwriter bounces."
Not original, I'm afraid, which is why I put it in quotes, but I can't find the place I first saw it. It was a serious book about retirement planning, published in 1998 or thereabouts, but the title escapes me. It wasn't "Spend Till the End" which is a real book, much later, by different people.
:oops: Undertaker.

Yup! I have heard the expression also, which is why the "underwriter" typo made me laugh :D
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Re: Retirees are hoarding cash

Post by KlingKlang »

mac808 wrote:Wouldn't the 2009 financial crisis be expected to create another mini generation of "depression era" folks?
I was raised by "depression era" folks. In my opinion the 2007 - 2009 financial crisis was too short and there were too many government safety nets in place. No widespread bank failures, and the only people in soup lines were the poor folks who had been there all of their lives anyway.
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Re: Retirees afraid to spend? (Bloomberg)

Post by Carefreeap »

Sheepdog wrote:I haven't read the article, but I think I understand. One reason is that more and more and more retirees no longer have a guaranteed pension to protect them, so if they screw up their investments and don't watch their spending, they may reach old age with nothing.
Yeah and seeing what happens to your family can affect you too.

Mom died at age 70 in 2008 $400k in debt.

Dad is 81 with $1,500 to his name. Although he's in a good situation right now, I'm concerned about when he can no longer live in his girlfriend's house and needs to move to assisted living. I suspect there's a long list for Medicaid eligible space.

DH and I are o.k. but my brother who is 14 months younger than I (he's turning 55) has no money, no savings, no pension.

It's frightening to see what people have done to themselves.
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Re: Retirees afraid to spend? (Bloomberg)

Post by Levett »

I must be hanging out with the wrong crowd of retirees. I see no reluctance to spend. ;-)

Lev

P.S. A lot of this ground was recently covered by Meir Statman in a Wall Street Journal article, "The Mental Mistakes we make with Retirement Spending."
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Re: Retirees afraid to spend? (Bloomberg)

Post by MathWizard »

Watty wrote:I looked at the website of the company that was mentioned, United Income. It was a more than a bit vague as to what they do but it reeked of annuity sales or something similar.

In the article it said;
Other studies have found affluent older Americans hoarding money. Last year, a study in the Journal of Financial Planning found that the wealthiest fifth of U.S. retirees were spending 53 percent less than they could have. Meanwhile, the poorest 40 percent generally spend more than they safely should; the median retiree spent about 8 percent less than the safe amount.
So basically the article is about how portfolios the top 20% of retirees are more than large enough to support their spending so they are "hoarding money".

That was a pretty worthless article.
I was thinking the same thing, however, the article might be most pertinent for people on this board.

I expect that the majority of the people here will be among the top 20% of retirees.
You can check at:
https://dqydj.com/net-worth-by-age-calc ... ed-states/

Though you'll have to adjust you current wealth for inflation , since the calculator is based on 2013 values.
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Re: Retirees afraid to spend? (Bloomberg)

Post by rhornback »

livesoft wrote:It's a manifestation of the alternative gloom & doom facts that these folks see in their daily intake of media. Previous generations were blissfully unaware of unimportant noise and hysteria.


+1 This does seems worse than when I grow up (or maybe I was not paying attention then). But yes my parents (83 and 82) watch a lot of TV. And if it bleeds it leads
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Re: Retirees are hoarding cash

Post by Vanguard Fan 1367 »

KlingKlang wrote:
mac808 wrote:Wouldn't the 2009 financial crisis be expected to create another mini generation of "depression era" folks?
I was raised by "depression era" folks. In my opinion the 2007 - 2009 financial crisis was too short and there were too many government safety nets in place. No widespread bank failures, and the only people in soup lines were the poor folks who had been there all of their lives anyway.
I enjoy Norman Vincent Peale's books. He says that although the news media and politicians go bananas over "recessions" that the Great Depression really was different than any of them. Things were really challenging then.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
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Re: Retirees afraid to spend? (Bloomberg)

Post by LadyGeek »

I merged RadAudit's thread into here, which is in the Personal Finance (Not Investing) forum.

This thread has run its course and is locked (not personal nor actionable). General comment threads are off topic in the forums with "Personal" in the title. See: A reminder that non-investing general comment threads are OT
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Rich Retirees Are Hoarding Cash Out of Fear

Post by Beliavsky »

[Thread merged into here, see below. --admin LadyGeek]

Rich Retirees Are Hoarding Cash Out of Fear
by Ben Steverman
Bloomberg
May 16, 2017, 4:00 AM EDT
A new study finds many U.S. retirees keep saving even after they’ve retired. The average American over the age of 60 cuts spending 2.5 percent per year, or about 20 percent over a 10-year period, according to an analysis of University of Michigan survey data by financial planning software company United Income. As a result, millions of Americans are living too frugally, said Matt Fellowes, United Income’s CEO 1 . On average and adjusting for inflation, retirees are entering their 80s richer than they were in their 60s and 70s.
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Re: Rich Retirees Are Hoarding Cash Out of Fear

Post by Levett »

There's another thread about this. You might look for it (or maybe it was locked, come to think of it).

It's only "actionable" for those of us who like to spend (prudently, of course!). :wink:

Lev
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Re: Rich Retirees Are Hoarding Cash Out of Fear

Post by JDCarpenter »

Levett wrote:There's another thread about this. You might look for it (or maybe it was locked, come to think of it).

It's only "actionable" for those of us who like to spend (prudently, of course!). :wink:

Lev
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Re: Rich Retirees Are Hoarding Cash Out of Fear

Post by afan »

This assumes one only retrains spending out of fear. Otherwise, everyone would spend every penny they have???

Just because someone reduces spending during their 60's does not mean they are "living too frugally". Maybe they have bought what they need.

Relieved of kids, mortgage and education expenses they may have less things they want that cost a lot of money.

Developing a spending plan is certainly actionable.
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Re: Retirees afraid to spend? (Bloomberg)

Post by LadyGeek »

I merged Beliavsky's thread into here. In addition to my previous post, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
  • US or world economic, political, tax, health care and climate policies
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  • discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
The thread will remain locked.
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