Dying Broke (On Purpose) Article

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michaeljc70
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Re: Dying Broke (On Purpose) Article

Post by michaeljc70 »

I have not read the book (the link in the OP is dead also). But seriously, how do I die broke if I want to???? I retired at 46 and at that point I could live another 46 years (relatives have lived longer than 92). I have no idea if I will inherit money and if so how much. I have no idea how my investments will really perform over the next 40 years. I will get social security....and maybe it will be at current levels. I have no idea what taxes will be in 40 years. If I was 60-70 years old I think I'd have a lot more insight into where I stand. I have a good amount more money now than when I retired 5 years ago, but we've been in a bull market so that is no surprise.

When I run Firecalc and similar I do die broke (actually less than broke) in ~5% of the scenarios if I make it to that age. In some scenarios I have millions of dollars when I die. So, I really don't know how you would truly implement this. Amortized based withdrawal might help....but still....you don't know what age you will die.
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happyisland
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Re: Dying Broke (On Purpose) Article

Post by happyisland »

michaeljc70 wrote: Tue Jul 20, 2021 4:35 pm I have not read the book (the link in the OP is dead also). But seriously, how do I die broke if I want to???? I retired at 46 and at that point I could live another 46 years (relatives have lived longer than 92). I have no idea if I will inherit money and if so how much. I have no idea how my investments will really perform over the next 40 years. I will get social security....and maybe it will be at current levels. I have no idea what taxes will be in 40 years. If I was 60-70 years old I think I'd have a lot more insight into where I stand. I have a good amount more money now than when I retired 5 years ago, but we've been in a bull market so that is no surprise.

When I run Firecalc and similar I do die broke (actually less than broke) in ~5% of the scenarios if I make it to that age. In some scenarios I have millions of dollars when I die. So, I really don't know how you would truly implement this. Amortized based withdrawal might help....but still....you don't know what age you will die.
Sounds like you should read the book! :D
michaeljc70
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Re: Dying Broke (On Purpose) Article

Post by michaeljc70 »

happyisland wrote: Tue Jul 20, 2021 4:37 pm
michaeljc70 wrote: Tue Jul 20, 2021 4:35 pm I have not read the book (the link in the OP is dead also). But seriously, how do I die broke if I want to???? I retired at 46 and at that point I could live another 46 years (relatives have lived longer than 92). I have no idea if I will inherit money and if so how much. I have no idea how my investments will really perform over the next 40 years. I will get social security....and maybe it will be at current levels. I have no idea what taxes will be in 40 years. If I was 60-70 years old I think I'd have a lot more insight into where I stand. I have a good amount more money now than when I retired 5 years ago, but we've been in a bull market so that is no surprise.

When I run Firecalc and similar I do die broke (actually less than broke) in ~5% of the scenarios if I make it to that age. In some scenarios I have millions of dollars when I die. So, I really don't know how you would truly implement this. Amortized based withdrawal might help....but still....you don't know what age you will die.
Sounds like you should read the book! :D
I would...if I thought it could answer unanswerable questions!
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happyisland
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Re: Dying Broke (On Purpose) Article

Post by happyisland »

michaeljc70 wrote: Tue Jul 20, 2021 4:38 pm
happyisland wrote: Tue Jul 20, 2021 4:37 pm
michaeljc70 wrote: Tue Jul 20, 2021 4:35 pm I have not read the book (the link in the OP is dead also). But seriously, how do I die broke if I want to???? I retired at 46 and at that point I could live another 46 years (relatives have lived longer than 92). I have no idea if I will inherit money and if so how much. I have no idea how my investments will really perform over the next 40 years. I will get social security....and maybe it will be at current levels. I have no idea what taxes will be in 40 years. If I was 60-70 years old I think I'd have a lot more insight into where I stand. I have a good amount more money now than when I retired 5 years ago, but we've been in a bull market so that is no surprise.

When I run Firecalc and similar I do die broke (actually less than broke) in ~5% of the scenarios if I make it to that age. In some scenarios I have millions of dollars when I die. So, I really don't know how you would truly implement this. Amortized based withdrawal might help....but still....you don't know what age you will die.
Sounds like you should read the book! :D
I would...if I thought it could answer unanswerable questions!
It sounds like you might be missing the point of the "die broke" philosophy. It's not a literal goal of dying with zero dollars. These books and articles just have titles like that to generate attention and sell copies. The focus, rather, is on USING as much of your wealth as possible (on yourself, charities, heirs, etc) while you are still alive to enjoy it. This would be after making sure that all of your needs are met so that you are able to live your desired lifestyle, and have the insurance to cover possible longevity or LTC needs.

Books and articles on the subject typically discuss things like how to turn wealth into income using SPIAs, how to buy LTC insurance, reverse mortgages, etc.
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Re: Dying Broke (On Purpose) Article

Post by RadAudit »

OP, thanks for starting this thread.

The discussion has prompted me toward beginning to give away parts of the estate as early as this year, if only to see how the kids use it. Additionally, it looks as if I'll be on the hook for the grandkids college educations. The IPS says to evenly divide the money between the kids - so, I guess I get to multiply those college costs by two. That should get the estate down closer to the point where neither I nor DW become a burden to the kids - one of the other goals.
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.
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Taylor Larimore
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Re: Dying Broke (On Purpose) Article

Post by Taylor Larimore »

Bogleheads:

When my wife and I were about 80 years old we bought two single-premium life annuities (SPIAs):

The first was an Aviva SPIA purchased in 2006. We were pleased with the purchase and purchased a Genworth Annuity a year later. Both annuities are easy to understand. They were purchased from www.immediateannuities.com.

Knowing that we had a guaranteed income for for the rest of our lives, our two annuities (together with my pension and social securities) gave us peace of mind and allowed us to start giving our heirs their inheritance (in the form of a monthly allowance) while we are still alive! They love it which pleased us.

I consider our two SPIA annuities the best investments we ever made.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurate high return."
"Simplicity is the master key to financial success." -- Jack Bogle
JayDee37
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Re: Dying Broke (On Purpose) Article

Post by JayDee37 »

My dad has always said that his goal is to spend his last dollar on the day he dies. I love this approach for my parents. I have taken so much joy in seeing them do so many of the things they've dreamed of doing during retirement, such as buying their little dream cottage in a charming beach town, fixing it up exactly how they want it, tons of travel (Covid and health permitting), little day to day perks like excellent coffee, fresh flowers, meals out (Covid-permitting), etc. It makes me so happy to see them happy and fulfilled and enjoying both the big and little things in life. I wouldn't have it any other way. That's plenty of inheritance. :happy
Tell me, what do you plan to do with your one wild and precious life? | ~Mary Oliver
gubernaculum
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Re: Dying Broke (On Purpose) Article

Post by gubernaculum »

I totally agree with philosophy to spend the money to help others and enjoy life fully.
Normchad
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Re: Dying Broke (On Purpose) Article

Post by Normchad »

Taylor Larimore wrote: Tue Jul 20, 2021 5:20 pm Bogleheads:

When my wife and I were about 80 years old we bought two single-premium life annuities (SPIAs):

The first was an Aviva SPIA purchased in 2006. We were pleased with the purchase and purchased a Genworth Annuity a year later. Both annuities are easy to understand. They were purchased from www.immediateannuities.com.

Knowing that we had a guaranteed income for for the rest of our lives, our two annuities (together with my pension and social securities) gave us peace of mind and allowed us to start giving our heirs their inheritance (in the form of a monthly allowance) while we are still alive! They love it which pleased us.

I consider our two SPIA annuities the best investments we ever made.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurate high return."
This seems like a great approach. I hope I can remember to pursue this when the time comes……
Wannaretireearly
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Re: Dying Broke (On Purpose) Article

Post by Wannaretireearly »

Taylor Larimore wrote: Tue Jul 20, 2021 5:20 pm Bogleheads:

When my wife and I were about 80 years old we bought two single-premium life annuities (SPIAs):

The first was an Aviva SPIA purchased in 2006. We were pleased with the purchase and purchased a Genworth Annuity a year later. Both annuities are easy to understand. They were purchased from www.immediateannuities.com.

Knowing that we had a guaranteed income for for the rest of our lives, our two annuities (together with my pension and social securities) gave us peace of mind and allowed us to start giving our heirs their inheritance (in the form of a monthly allowance) while we are still alive! They love it which pleased us.

I consider our two SPIA annuities the best investments we ever made.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurate high return."
Thanks Taylor! Seems like such a minefield. Appreciate your post.
Death and taxes. Only one is under your control!
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Re: Dying Broke (On Purpose) Article

Post by Wanderingwheelz »

JayDee37 wrote: Tue Jul 20, 2021 5:31 pm My dad has always said that his goal is to spend his last dollar on the day he dies. I love this approach for my parents. I have taken so much joy in seeing them do so many of the things they've dreamed of doing during retirement, such as buying their little dream cottage in a charming beach town, fixing it up exactly how they want it, tons of travel (Covid and health permitting), little day to day perks like excellent coffee, fresh flowers, meals out (Covid-permitting), etc. It makes me so happy to see them happy and fulfilled and enjoying both the big and little things in life. I wouldn't have it any other way. That's plenty of inheritance. :happy
The little property in the charming beach town my folks bought has appreciated about 1800% over the years since they bought it, so you may want to prepare yourself for an inheritance of more than memories and feelings of happiness. Beach real estate can be one of the best investments of them all.

I finished reading Die With Zero a few days ago and I’d recommend that everyone who considers themselves a Boglehead read it. Not because it’s a great book on personal finance,
because it isn’t. In fact, I wouldn’t recommend most people read it at all since spending for most people is easy- too easy. For Bogleheads, though, I think it can be useful simply because it offers a different perspective than what is typically discussed here on the regular, which I think is refreshing. YMMV
3 Fund Portfolio. 70/30 AA. No mortgage. Simplicity is key.
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Re: Dying Broke (On Purpose) Article

Post by LilyFleur »

willthrill81 wrote: Mon Oct 05, 2020 4:09 pm
Broken Man 1999 wrote: Mon Oct 05, 2020 4:04 pm I would like to know how to determine only our personal needs at age 67, given longevity runs in DW's family as well as mine. We both could live decades more. I have no clue what my expenses will be in this new decade, much less a couple of decades down the road. As it is today, healthcare spending the largest expense in our finances.
:thumbsup

Unless you know how long you will live, you cannot practically 'die broke' or anything reasonably resembling such a state without placing most of your assets into a SPIA.

The detailed longevity calculators I've ran place my expected lifespan at 92 to 101. But I might not ever make it to 50, or I might live to 111 like one of my forebears. Longevity is the big unknown.
I'm pretty sure I won't make it much past 80, given a chronic health condition I have.
Regardless, my Schwab guy is planning to age 90 for me, and that includes substantial down payments on houses for my two hard-working young adult children and modest chunks of money for their weddings. Selfishly, I would much rather they receive part of their inheritance while I can experience the joy of giving it to them. There will still be plenty to take care of me, and most of what I enjoy is not spendy, anyway. When I told my daughter what I was planning, (and it's always with the caveat that it depends on how the market is doing), she blurted out, "Mommy, how can you do that? You need to take care of you!" Helping children who are hard-working and grateful and whose priority is taking care of me is one of the best parts of my life.
michaeljc70
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Re: Dying Broke (On Purpose) Article

Post by michaeljc70 »

happyisland wrote: Tue Jul 20, 2021 5:04 pm
michaeljc70 wrote: Tue Jul 20, 2021 4:38 pm
happyisland wrote: Tue Jul 20, 2021 4:37 pm
michaeljc70 wrote: Tue Jul 20, 2021 4:35 pm I have not read the book (the link in the OP is dead also). But seriously, how do I die broke if I want to???? I retired at 46 and at that point I could live another 46 years (relatives have lived longer than 92). I have no idea if I will inherit money and if so how much. I have no idea how my investments will really perform over the next 40 years. I will get social security....and maybe it will be at current levels. I have no idea what taxes will be in 40 years. If I was 60-70 years old I think I'd have a lot more insight into where I stand. I have a good amount more money now than when I retired 5 years ago, but we've been in a bull market so that is no surprise.

When I run Firecalc and similar I do die broke (actually less than broke) in ~5% of the scenarios if I make it to that age. In some scenarios I have millions of dollars when I die. So, I really don't know how you would truly implement this. Amortized based withdrawal might help....but still....you don't know what age you will die.
Sounds like you should read the book! :D
I would...if I thought it could answer unanswerable questions!
It sounds like you might be missing the point of the "die broke" philosophy. It's not a literal goal of dying with zero dollars. These books and articles just have titles like that to generate attention and sell copies. The focus, rather, is on USING as much of your wealth as possible (on yourself, charities, heirs, etc) while you are still alive to enjoy it. This would be after making sure that all of your needs are met so that you are able to live your desired lifestyle, and have the insurance to cover possible longevity or LTC needs.

Books and articles on the subject typically discuss things like how to turn wealth into income using SPIAs, how to buy LTC insurance, reverse mortgages, etc.
So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
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happyisland
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Re: Dying Broke (On Purpose) Article

Post by happyisland »

michaeljc70 wrote: Tue Jul 20, 2021 11:45 pm So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
You seem like you might still be missing the point here, so if you're interested in learning more about the topic I think one of the books or articles mentioned up-thread might be helpful.
Last edited by happyisland on Wed Jul 21, 2021 7:07 am, edited 1 time in total.
nigel_ht
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Re: Dying Broke (On Purpose) Article

Post by nigel_ht »

michaeljc70 wrote: Tue Jul 20, 2021 11:45 pm
So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
Explain how you build a reasonable retirement plan that doesn’t require over saving because of SORR and unknown unknowns which generally results in “gobs of money extra”
when they die.

Either your retirement portfolio is overfunded or has significant risk of failure. If you have a strategy where this isn’t the case we’re all interested.

For me this is a non-issue. I want to have millions when I pass away because I have plans for both charity and family but for a lot of folks this is not an optimal outcome.

Also for folks that are compulsive savers it’s really hard to spend enough to make sure their needs are actually reasonably met for their level of wealth.

My parents were ultra frugal and choose a frugal medical insurance option and I think my dad would have lived longer and in better health had they gotten the gold plated version they could afford. A routine procedure went less than optimally which accelerated his decline and I think it would have gone better at Hopkins than at Kaiser.

Maybe not but we’ll never know now.
camper1
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Re: Dying Broke (On Purpose) Article

Post by camper1 »

happyisland wrote: Wed Jul 21, 2021 6:42 am
michaeljc70 wrote: Tue Jul 20, 2021 11:45 pm So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
You seem like you might still be missing the point here, so if you're interested in learning more about the topic I think one of the books or articles mentioned up-thread might be helpful.
Yes, when I revived this thread from last year I was hoping to get more comments from other who actually read the book! It seems that most of the negative comments are from folks who have not read it and cant get past the title! I think it's a very relevant topic to think about as we plan our future and make decisions on how we will get the most value for our time and money rather than just accumulating. I think for many of us, myself included, this is not something we considered much while "saving for retirement" and saving comes mush more naturally than spending.
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Re: Dying Broke (On Purpose) Article

Post by HootingSloth »

camper1 wrote: Wed Jul 21, 2021 7:34 am
happyisland wrote: Wed Jul 21, 2021 6:42 am
michaeljc70 wrote: Tue Jul 20, 2021 11:45 pm So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
You seem like you might still be missing the point here, so if you're interested in learning more about the topic I think one of the books or articles mentioned up-thread might be helpful.
Yes, when I revived this thread from last year I was hoping to get more comments from other who actually read the book! It seems that most of the negative comments are from folks who have not read it and cant get past the title! I think it's a very relevant topic to think about as we plan our future and make decisions on how we will get the most value for our time and money rather than just accumulating. I think for many of us, myself included, this is not something we considered much while "saving for retirement" and saving comes mush more naturally than spending.
Efficiently spending down your portfolio is an interesting topic, an important one for many, and the criticism without bothering to learn about the book seems misplaced. Maybe, to help those of us who cannot read the article (dead link) and might be considering getting the book, you could give a very rough outline of the recommended strategy? It seems that a "standard Boglehead" approach to this problem would be some combination of Social Security, pensions, and a SPIA purchased in one's 80s (and possibly long term care insurance), together with VPW/ABW. Or maybe you found more value in the book from the philosophy than the strategy. What part of the book did you find most surprising or helpful?
Global Market Portfolio + modest tilt towards volatility (80/20->60/40 as approach FI) + modest tilt away from exchange rate risk (80% global+20% U.S. stocks; currency-hedge bonds) + tax optimization
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Re: Dying Broke (On Purpose) Article

Post by changingtimes »

I downloaded it but have not yet really gotten far into it, but it's certainly the philosophy I want to live by. With no kids, and with DH having died young, to me it would be a failure to end up leaving a huge pot of money for others to enjoy, because that would mean that neither DH nor I really got to enjoy the sum of our labors.

The flip side of course is that aging solo I feel like I need a bigger cushion of being able to be cared for should I need it without skimping. So I highly doubt I will die with zero. But I also really like Taylor's approach of buying an annuity at a future point that, with pensions and SS, would easily cover my non negotiable expenses, making the "fun money" pot more easily grasped.

In the meantime, I'm not suddenly renting jets or any such things, but given that I'm still working and my nest egg is already a 100% FireCalc success even with a yearly spend well above my current rate, I have stopped worrying when I buy whatever tech toys catch my eye, have a landscaping company and a maid service, stay in upper scale hotels, etc. I leave bigger tips, I do more charity donations, try to grab the check whenever out with friends, etc. Down the road it might mean a vacation home, first class plane tickets, and stuff like that. Spending to make life less stressful where possible.
rgs92
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Re: Dying Broke (On Purpose) Article

Post by rgs92 »

Isn't using your portfolio for income in order to delay Social Security as long as possible the first thing one would do in pursuit of dying broke?
(I saw social security mentioned above but not exactly from this perspective.)

Once this is done, I guess an immediate annuity (SPIA) is an option, but it just seems to be a terrible thing to buy with interest rates near historic lows.
Translating lump sums to no-risk income is pretty difficult these days.

That's why whenever a "Choose Lump Sum or Pension" question comes up, I always suggest the pension is the better option, because (usually) at least it is better than a dismal open market offering.

Sorry for the tangential remarks here, but I felt it was related and could be applicable to those reading this thread.
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Re: Dying Broke (On Purpose) Article

Post by Bronko »

camper1 wrote: Wed Jul 21, 2021 7:34 am
happyisland wrote: Wed Jul 21, 2021 6:42 am
michaeljc70 wrote: Tue Jul 20, 2021 11:45 pm So, it is a plan for people that were extremely conservative to suddenly spend all their money? You said "after making sure that all your needs are met". Well....reasonable people plan their retirement entirely around that and don't have gobs of money extra. Sorry, but you sound like an annuity salesperson.
You seem like you might still be missing the point here, so if you're interested in learning more about the topic I think one of the books or articles mentioned up-thread might be helpful.
Yes, when I revived this thread from last year I was hoping to get more comments from other who actually read the book! It seems that most of the negative comments are from folks who have not read it and cant get past the title! I think it's a very relevant topic to think about as we plan our future and make decisions on how we will get the most value for our time and money rather than just accumulating. I think for many of us, myself included, this is not something we considered much while "saving for retirement" and saving comes mush more naturally than spending.
Camper1 I read the book and brought up the topic in another forum. Same results. Some people immediately think the sensational title imparts everything in the book. If one takes the time to read it (even from the library for free) I think it can open up some alternative thought patterns. I will say it made me decide to take the family on a great trip this year. More expensive and exotic than previously planned. Result, incredible experience. Truly a bucket list memory trip that will be remembered for decades.

The book also touches on giving while alive, how not to outlive money spent, etc.

I just scroll past the people who want to argue on the internet without reading the book. Why comment at all.

Glad you enjoyed it. While it didn't do a 180 on my financial mindset it really made me look inside at what's important.
Never let a little bit of money get in the way of a real good time.
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Re: Dying Broke (On Purpose) Article

Post by randomguy »

HootingSloth wrote: Wed Jul 21, 2021 9:06 am Efficiently spending down your portfolio is an interesting topic, an important one for many, and the criticism without bothering to learn about the book seems misplaced. Maybe, to help those of us who cannot read the article (dead link) and might be considering getting the book, you could give a very rough outline of the recommended strategy? It seems that a "standard Boglehead" approach to this problem would be some combination of Social Security, pensions, and a SPIA purchased in one's 80s (and possibly long term care insurance), together with VPW/ABW. Or maybe you found more value in the book from the philosophy than the strategy. What part of the book did you find most surprising or helpful?

The Original Die broke guy would hate VPW/ABW because of how inefficient they are at spending down the portfolio. He was in favor of income smoothing not hoarding up your money so you can spend like a drunken sailor when your 90.....

People focus too much on the die broke part and miss that was more of a slogan not the goal. The goal was to smooth spending (i.e. don't skip out on a vacation when your young cause that 5k would be worth 200k in 40 years) and income (he was in favor of working pretty much until you die) and not having much assets when you die was a result of that. Note that spending pretty much includes inheritances and charity. Instead of giving you kids 2 million when you die, he was in favor of giving 1 million (which would have compounded over the years to be the same as 2 million) when they were younger.

How exactly to execute this the hard part given the uncertainty. A 60 year old retiree could be looking at spending 6% (i.e. normal retirement), 8% (a good one) or 3.5% (a really bad one). So you can be exact. You could do things like build a bond tent and say your are living on 5% for those first 15 go-go years and then adapt for the rest of your life (i.e. work longer in that part time job, plan on living on 3% if things don't work out), and so on.

Obviously the implementation part depends a lot on what "failure means". If things go wrong and you are living on 20k/year instead of 40k that is rough. Things go wrong and you are living on 150k instead of 300k, you will be fine. The less you can handle the downsides, the more conservative you need to be.

The tough part is you really need to be spending the money early not by retirement. It is too late then. My parents have decide they have too much money and have started passing it down the kids. But we are all at the point where it doesn't nothing. 15k/year doesn't move the needle for a people in their 40s/50s the same way it would have when we were 20 or even early 30s. Now it just ends up in an investment account. But it isn't like my parents could have know 15-20 years ago that the they would have excess money. And I am in the same boat where there are limits to what I can spend on kids. Partly that is to teach them limits (i.e. a 12 year probably doesn't need a 10k violin and 3 international trips/year:)) and partly because of fear of the unknown (i.e. if I retire tomorrow is my SWR going to be 3% or 6%. Will I retire tomorrow or in 10 years?).
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Re: Dying Broke (On Purpose) Article

Post by Wrench »

LilyFleur wrote: Tue Jul 20, 2021 8:59 pm
willthrill81 wrote: Mon Oct 05, 2020 4:09 pm
Broken Man 1999 wrote: Mon Oct 05, 2020 4:04 pm I would like to know how to determine only our personal needs at age 67, given longevity runs in DW's family as well as mine. We both could live decades more. I have no clue what my expenses will be in this new decade, much less a couple of decades down the road. As it is today, healthcare spending the largest expense in our finances.
:thumbsup

Unless you know how long you will live, you cannot practically 'die broke' or anything reasonably resembling such a state without placing most of your assets into a SPIA.

The detailed longevity calculators I've ran place my expected lifespan at 92 to 101. But I might not ever make it to 50, or I might live to 111 like one of my forebears. Longevity is the big unknown.
I'm pretty sure I won't make it much past 80, given a chronic health condition I have.
Regardless, my Schwab guy is planning to age 90 for me, and that includes substantial down payments on houses for my two hard-working young adult children and modest chunks of money for their weddings. Selfishly, I would much rather they receive part of their inheritance while I can experience the joy of giving it to them. There will still be plenty to take care of me, and most of what I enjoy is not spendy, anyway. When I told my daughter what I was planning, (and it's always with the caveat that it depends on how the market is doing), she blurted out, "Mommy, how can you do that? You need to take care of you!" Helping children who are hard-working and grateful and whose priority is taking care of me is one of the best parts of my life.
LilyFleur - with a child like that, you have all the wealth you ever need, regardless of what your bank statement says.
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Re: Dying Broke (On Purpose) Article

Post by averagedude »

austin757 wrote: Sat Oct 03, 2020 9:25 pm There was a book published in the late 90s called “Die Broke” that’s similar to what was said in the article. The major theme was to be generous with your money while you’re still alive, rather than leave a large nest egg to ungrateful heirs.

As mentioned, it’s tough because we can’t predict when we’re going to die (obviously). You could be in your 40s and find out you have Stage IV cancer, or you could be like Taylor who is well into his 90s and strong as an ox. I suppose like everything in life, try to find some common ground and balance.
I remember reading this book a long time ago and it did intrigue me. If I remember correctly, the part that I didn't like was that the author advocated working your entire life, but perhaps not full time. I think he also said that it wasn't realistic to work until you are fifty and then never work again. He was wrong, because it is possible to do, even with a middle income salary.
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Re: Dying Broke (On Purpose) Article

Post by HootingSloth »

randomguy wrote: Wed Jul 21, 2021 6:47 pm
HootingSloth wrote: Wed Jul 21, 2021 9:06 am Efficiently spending down your portfolio is an interesting topic, an important one for many, and the criticism without bothering to learn about the book seems misplaced. Maybe, to help those of us who cannot read the article (dead link) and might be considering getting the book, you could give a very rough outline of the recommended strategy? It seems that a "standard Boglehead" approach to this problem would be some combination of Social Security, pensions, and a SPIA purchased in one's 80s (and possibly long term care insurance), together with VPW/ABW. Or maybe you found more value in the book from the philosophy than the strategy. What part of the book did you find most surprising or helpful?

The Original Die broke guy would hate VPW/ABW because of how inefficient they are at spending down the portfolio. He was in favor of income smoothing not hoarding up your money so you can spend like a drunken sailor when your 90.....

People focus too much on the die broke part and miss that was more of a slogan not the goal. The goal was to smooth spending (i.e. don't skip out on a vacation when your young cause that 5k would be worth 200k in 40 years) and income (he was in favor of working pretty much until you die) and not having much assets when you die was a result of that. Note that spending pretty much includes inheritances and charity. Instead of giving you kids 2 million when you die, he was in favor of giving 1 million (which would have compounded over the years to be the same as 2 million) when they were younger.

How exactly to execute this the hard part given the uncertainty. A 60 year old retiree could be looking at spending 6% (i.e. normal retirement), 8% (a good one) or 3.5% (a really bad one). So you can be exact. You could do things like build a bond tent and say your are living on 5% for those first 15 go-go years and then adapt for the rest of your life (i.e. work longer in that part time job, plan on living on 3% if things don't work out), and so on.

Obviously the implementation part depends a lot on what "failure means". If things go wrong and you are living on 20k/year instead of 40k that is rough. Things go wrong and you are living on 150k instead of 300k, you will be fine. The less you can handle the downsides, the more conservative you need to be.

The tough part is you really need to be spending the money early not by retirement. It is too late then. My parents have decide they have too much money and have started passing it down the kids. But we are all at the point where it doesn't nothing. 15k/year doesn't move the needle for a people in their 40s/50s the same way it would have when we were 20 or even early 30s. Now it just ends up in an investment account. But it isn't like my parents could have know 15-20 years ago that the they would have excess money. And I am in the same boat where there are limits to what I can spend on kids. Partly that is to teach them limits (i.e. a 12 year probably doesn't need a 10k violin and 3 international trips/year:)) and partly because of fear of the unknown (i.e. if I retire tomorrow is my SWR going to be 3% or 6%. Will I retire tomorrow or in 10 years?).
Thanks for giving some flavor of the book's take on things. It sounds like a different perspective, and maybe I will still pick it up..

With my wife's help, I have been sure to have fun and not be too miserly in my 20s and 30s (e.g., we've been to 20 countries on six continents), and I plan to do charitable giving and inheritance as I go, rather than all at the end. While I plan to work many years more than I "have" to, the work until I die part does not sound very appealing though.
Global Market Portfolio + modest tilt towards volatility (80/20->60/40 as approach FI) + modest tilt away from exchange rate risk (80% global+20% U.S. stocks; currency-hedge bonds) + tax optimization
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Re: Dying Broke (On Purpose) Article

Post by cheese_breath »

I didn't read the article or the four pages of posts preceding this one. But what if there's a medical treatment that could save or significantly prolong the quality of your life, and you can't pay for it because you blew everything so you could die broke? (I guess you'd achieve your purpose just a little early).
The surest way to know the future is when it becomes the past.
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Re: Dying Broke (On Purpose) Article

Post by happyisland »

cheese_breath wrote: Thu Jul 22, 2021 5:15 pm I didn't read the article or the four pages of posts preceding this one. But what if there's a medical treatment that could save or significantly prolong the quality of your life, and you can't pay for it because you blew everything so you could die broke? (I guess you'd achieve your purpose just a little early).

I don't know much about the US medical insurance industry, but it seems like this would be an easy thing to plan for. Couldn't you just make sure you had the right level of paid-up insurance?

Again, despite the headlines, the goal isn't necessarily to die flat broke. The goal is to try to enjoy as much of your wealth as possible while you're alive.
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Re: Dying Broke (On Purpose) Article

Post by randomguy »

happyisland wrote: Thu Jul 22, 2021 5:39 pm
cheese_breath wrote: Thu Jul 22, 2021 5:15 pm I didn't read the article or the four pages of posts preceding this one. But what if there's a medical treatment that could save or significantly prolong the quality of your life, and you can't pay for it because you blew everything so you could die broke? (I guess you'd achieve your purpose just a little early).

I don't know much about the US medical insurance industry, but it seems like this would be an easy thing to plan for. Couldn't you just make sure you had the right level of paid-up insurance?

Again, despite the headlines, the goal isn't necessarily to die flat broke. The goal is to try to enjoy as much of your wealth as possible while you're alive.
Plenty of stuff isn't covered by health insurance. Maybe you want the 2 million dollar exosuit and they want to give you a 2k power scooter. But to a certain extent we aren't talking about specifics but generalities. There is always a chance you will need a chunk of money in the future. How much are you willing to let that possibility dictate your actions is up to you. You could work til 80 to maximize your portfolio size. But you are spending a lot of time working to get there. And of course a college professor might feel differently about working til 75 than a roofer does.

I found the book and the concepts to be a pretty good balance to the Millionaire Next Door with its focus on saving back when I read them back to back 20 years ago.
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Re: Dying Broke (On Purpose) Article

Post by GoneOnTilt »

JoeRetire wrote: Sun Oct 04, 2020 9:55 am Seems pretty silly to me.

Taking the proposed route means that if you abandon conservative personal finance principles and guess wrong, you are poor before you die, and perhaps a burden on your family.
Taking the more traditional approach means if you guess wrong, you leave less to charity and your family than planned, but aren't ever poor.
^ This.
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Re: Dying Broke (On Purpose) Article

Post by Sun88 »

I went ahead and put a hold on the 1998 version of this book at our local library, to help sort out the actual message vs the attention grabbing title.
Interesting to note one of the co-authors, Stephen Pollan, is the father of Michael and Tracy Pollan. I've enjoyed Michael Pollan's books.
We have been funding 529's for our grandkids and are considering funding Roth IRA's for our daughters. Maybe this discussion will help nudge us in one direction or the other.
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Re: Dying Broke (On Purpose) Article

Post by joechristmas »

I read the Perkins' book referenced in this article not long ago and I found it to be very thought-provoking. He makes some interesting points that are worth considering.

My biggest take away from this book was that it can be helpful to stop and take a 30,000 foot view of your financial resources and think about your life and how to optimally use those resources to live a full life at all the different stages of life.

I definitely think that some people get carried away with investing and their careers and sometimes need to think about what they are doing. You're probably not going to be able to hold your small children or climb Kilimanjaro when you're 80. He does have a point there.
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Re: Dying Broke (On Purpose) Article

Post by LilyFleur »

Wrench wrote: Wed Jul 21, 2021 6:54 pm
LilyFleur wrote: Tue Jul 20, 2021 8:59 pm
willthrill81 wrote: Mon Oct 05, 2020 4:09 pm
Broken Man 1999 wrote: Mon Oct 05, 2020 4:04 pm I would like to know how to determine only our personal needs at age 67, given longevity runs in DW's family as well as mine. We both could live decades more. I have no clue what my expenses will be in this new decade, much less a couple of decades down the road. As it is today, healthcare spending the largest expense in our finances.
:thumbsup

Unless you know how long you will live, you cannot practically 'die broke' or anything reasonably resembling such a state without placing most of your assets into a SPIA.

The detailed longevity calculators I've ran place my expected lifespan at 92 to 101. But I might not ever make it to 50, or I might live to 111 like one of my forebears. Longevity is the big unknown.
I'm pretty sure I won't make it much past 80, given a chronic health condition I have.
Regardless, my Schwab guy is planning to age 90 for me, and that includes substantial down payments on houses for my two hard-working young adult children and modest chunks of money for their weddings. Selfishly, I would much rather they receive part of their inheritance while I can experience the joy of giving it to them. There will still be plenty to take care of me, and most of what I enjoy is not spendy, anyway. When I told my daughter what I was planning, (and it's always with the caveat that it depends on how the market is doing), she blurted out, "Mommy, how can you do that? You need to take care of you!" Helping children who are hard-working and grateful and whose priority is taking care of me is one of the best parts of my life.
LilyFleur - with a child like that, you have all the wealth you ever need, regardless of what your bank statement says.
You are right. Thank you for your wise words.
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Re: Dying Broke (On Purpose) Article

Post by cheese_breath »

e5116 wrote: Sat Oct 03, 2020 9:01 pm ..… Here's the key except in my opinion summarizing the argument: …..

….. “With each year that passes … our ability to convert dollars into positive life experiences declines over time,” Perkins tells me…..
IMO “positive life experiences” are overrated. DW and I took vacations after I retired, but we didn’t go overboard with world cruises and the like. And so when she had her stroke in early 2017, I could decline medicaid and provide her quality of life care and comforts medicaid wouldn’t have allowed.

COVID took her last year, but my “positive life experience” is right now in knowing I was able to make her life a little better when she was alive, and would have been able to do so several more years if COVID hadn’t taken her. And I wouldn’t trade that for world cruises every year.
The surest way to know the future is when it becomes the past.
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Re: Dying Broke (On Purpose) Article

Post by finite_difference »

If you have SS and SPIA income streams you will ensure that you never run out of money but you can also die broke.

I wouldn’t want to die broke because my spouse and family need money. I’d want to donate some percent to charity. But I agree with the idea of giving away and spending it while you can make the most of it. But you almost need to have a healthy buffer to make sure you don’t end up in a Medicaid nursing home.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
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Re: Dying Broke (On Purpose) Article

Post by GoneOnTilt »

LilyFleur wrote: Tue Jul 20, 2021 8:59 pm I'm pretty sure I won't make it much past 80, given a chronic health condition I have.
Regardless, my Schwab guy is planning to age 90 for me, and that includes substantial down payments on houses for my two hard-working young adult children and modest chunks of money for their weddings. Selfishly, I would much rather they receive part of their inheritance while I can experience the joy of giving it to them. There will still be plenty to take care of me, and most of what I enjoy is not spendy, anyway. When I told my daughter what I was planning, (and it's always with the caveat that it depends on how the market is doing), she blurted out, "Mommy, how can you do that? You need to take care of you!" Helping children who are hard-working and grateful and whose priority is taking care of me is one of the best parts of my life.
This is heartwarming. Thank you for sharing.
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Re: Dying Broke (On Purpose) Article

Post by Broken Man 1999 »

cheese_breath wrote: Fri Jul 23, 2021 12:06 pm
e5116 wrote: Sat Oct 03, 2020 9:01 pm ..… Here's the key except in my opinion summarizing the argument: …..

….. “With each year that passes … our ability to convert dollars into positive life experiences declines over time,” Perkins tells me…..
IMO “positive life experiences” are overrated. DW and I took vacations after I retired, but we didn’t go overboard with world cruises and the like. And so when she had her stroke in early 2017, I could decline medicaid and provide her quality of life care and comforts medicaid wouldn’t have allowed.

COVID took her last year, but my “positive life experience” is right now in knowing I was able to make her life a little better when she was alive, and would have been able to do so several more years if COVID hadn’t taken her. And I wouldn’t trade that for world cruises every year.
You spared no expense to have the best care for your wife. I agree, nothing else would have been a more positive life experience for you or her!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
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Re: Dying Broke (On Purpose) Article

Post by GoneOnTilt »

Broken Man 1999 wrote: Fri Jul 23, 2021 2:08 pm
cheese_breath wrote: Fri Jul 23, 2021 12:06 pm
e5116 wrote: Sat Oct 03, 2020 9:01 pm ..… Here's the key except in my opinion summarizing the argument: …..

….. “With each year that passes … our ability to convert dollars into positive life experiences declines over time,” Perkins tells me…..
IMO “positive life experiences” are overrated. DW and I took vacations after I retired, but we didn’t go overboard with world cruises and the like. And so when she had her stroke in early 2017, I could decline medicaid and provide her quality of life care and comforts medicaid wouldn’t have allowed.

COVID took her last year, but my “positive life experience” is right now in knowing I was able to make her life a little better when she was alive, and would have been able to do so several more years if COVID hadn’t taken her. And I wouldn’t trade that for world cruises every year.
You spared no expense to have the best care for your wife. I agree, nothing else would have been a more positive life experience for you or her!

Broken Man 1999
This has turned into a wonderful thread that is highlighting what really matters in life. Good stuff. And actionable at a variety of levels.
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Re: Dying Broke (On Purpose) Article

Post by JackoC »

randomguy wrote: Wed Jul 21, 2021 6:47 pm The Original Die broke guy would hate VPW/ABW because of how inefficient they are at spending down the portfolio. He was in favor of income smoothing not hoarding up your money so you can spend like a drunken sailor when your 90.....

People focus too much on the die broke part and miss that was more of a slogan not the goal. The goal was to smooth spending (i.e. don't skip out on a vacation when your young cause that 5k would be worth 200k in 40 years) and income (he was in favor of working pretty much until you die) and not having much assets when you die was a result of that. Note that spending pretty much includes inheritances and charity. Instead of giving you kids 2 million when you die, he was in favor of giving 1 million (which would have compounded over the years to be the same as 2 million) when they were younger.

How exactly to execute this the hard part given the uncertainty. A 60 year old retiree could be looking at spending 6% (i.e. normal retirement), 8% (a good one) or 3.5% (a really bad one). So you can be exact. You could do things like build a bond tent and say your are living on 5% for those first 15 go-go years and then adapt for the rest of your life (i.e. work longer in that part time job, plan on living on 3% if things don't work out), and so on.

Obviously the implementation part depends a lot on what "failure means". If things go wrong and you are living on 20k/year instead of 40k that is rough. Things go wrong and you are living on 150k instead of 300k, you will be fine. The less you can handle the downsides, the more conservative you need to be.

The tough part is you really need to be spending the money early not by retirement. It is too late then. My parents have decide they have too much money and have started passing it down the kids. But we are all at the point where it doesn't nothing. 15k/year doesn't move the needle for a people in their 40s/50s the same way it would have when we were 20 or even early 30s. Now it just ends up in an investment account. But it isn't like my parents could have know 15-20 years ago that the they would have excess money. And I am in the same boat where there are limits to what I can spend on kids. Partly that is to teach them limits (i.e. a 12 year probably doesn't need a 10k violin and 3 international trips/year:)) and partly because of fear of the unknown (i.e. if I retire tomorrow is my SWR going to be 3% or 6%. Will I retire tomorrow or in 10 years?).
I don't go in for actually reading books like that (there's finite time to read, I prefer books which tell me things I'm both interested in and really didn't know) but it sounds reasonable in general.

A couple of things I'd comment on are the $5k becomes $200k in 40 yrs, even if just illustrative hyperbole in the book or by you (~9.7% pa). This IMO is one of the places where unrealistic return expectations can be harmful. In general assuming lower returns would not make you save less, perhaps it would make you save more, in terms of aiming to maintain a particular general life style. But at the margin for a 'special' trip, car, what have you the argument often offered here to wait till that money grows into something much bigger...assumes it ever will. At what I'd consider realistic for a marginal addition to a balanced (say 60/40) portfolio in taxable, 1.5% real after tax, $5k becomes $9k in 40 yrs. Call me Buzz Killington, and maybe I'm too pessimistic, but again while lower return expectations don't rationally mean you'd save less for the general program of retirement, they do tend to cut in the other direction on arguments about particular 'few in a lifetime' splurges. Not only are we not Warren Buffett's who can create a fortune out of the money saved by getting haircuts less frequently (to paraphrase his comment, but who says even he could achieve returns like he has trying again, he's probably partly a statistical fluke, though surely a smart guy). We aren't even necessarily (those of us likely to last for 40 yrs from now) people who are going to get nearly the last 40 yr's returns.

Another is whether you have heirs you want to give money to. I'm sure the book covers various cases, but seems on the forum there are people without heirs, or ones that for specific family/personal relationship, cultural background or other personal belief reasons they don't want to give money to, and those of us with kids we love to give to. There's still a question in latter case, now/later, in terms of uncertainty of future parental expenses, market returns, 'dulling the kids' competitive edge' and so forth that apply to varying degrees. But there's also that basic divide which results in people talking past one another many times. It might be more optimal if we gave our kids less/more now and more/less later, but it's not as if leaving money behind for them is such a bad outcome (even if much of it may only help with the uncertainty of *their* later years by the time we go). I might feel differently if I were in the situation of some people I know in real life, and which I infer from some attitudes here.
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Re: Dying Broke (On Purpose) Article

Post by nigel_ht »

JackoC wrote: Fri Jul 23, 2021 2:49 pm 'dulling the kids' competitive edge'
Meh. My opinion is kids with a competitive personality will continue to have a competitive personality.

Kids with addiction prone personalities will continue to have addiction prone personalities.

Two kids growing up in the same household a couple years apart can have widely differing outcomes.
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Re: Dying Broke (On Purpose) Article

Post by Taylor Larimore »

finite_difference wrote: Fri Jul 23, 2021 12:18 pm If you have SS and SPIA income streams you will ensure that you never run out of money but you can also die broke.

I wouldn’t want to die broke because my spouse and family need money. I’d want to donate some percent to charity. But I agree with the idea of giving away and spending it while you can make the most of it. But you almost need to have a healthy buffer to make sure you don’t end up in a Medicaid nursing home.
finite:

We purchased a joint SPIA so that our income continues until the last to die. No "buffer" is needed.

Best wishes.
Taylor
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Re: Dying Broke (On Purpose) Article

Post by dboeger1 »

I sort of get the premise, but I think it's an oversimplification of many complex factors and scenarios. For example, if someone's life goal was to grow a business as large as possible, how would they die broke? I realize they could reinvest profits in the business and in some sense not having excess cash could fit the philosophy, but I wouldn't exactly consider ownership of a successful business broke, and it's also not necessarily something one would be willing to sell off just to go spend on other meaningful experiences. The meaningful thing can in fact be the investment or inheritance itself. For example, a large inheritance might fund education expenses for multiple generations of a family. Sure, that money could be spent enriching those children's lives while one is alive, but I don't think the difference is obvious enough to assert that most people should do one or the other. In that case, the ability to convert assets into meaningful life experience might actually be less for young children than it is for older investors on their death bed.
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Re: Dying Broke (On Purpose) Article

Post by pablolo »

Wow! This is truly a inspiring discussion. Thank you Taylor. I am not a millionaire, but would like to see if I am a candidate to do what Taylor and others did in regard to spending down all assets while living . A PM from a BH to help me make an informed decision would be greatly appreciated.
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Re: Dying Broke (On Purpose) Article

Post by JackoC »

nigel_ht wrote: Fri Jul 23, 2021 3:25 pm
JackoC wrote: Fri Jul 23, 2021 2:49 pm 'dulling the kids' competitive edge'
Meh. My opinion is kids with a competitive personality will continue to have a competitive personality.
Kids with addiction prone personalities will continue to have addiction prone personalities.
Two kids growing up in the same household a couple years apart can have widely differing outcomes.
I was just acknowledging this concern as potentially valid in some cases at least at the margin. I believe it's *way* overused here as a reason not to give to adult kids. The people invoking it often actually have other reasons IMO: cannot afford the specific gifts being discussed in a given thread is probably a major one. And, some people just *cannot* let go of money because of their personalities or life experiences, even though intellectually accepting they have a surplus. But 'I'm just holding onto this money because I can't let go, for no rational reason' is much more often true about people I believe than something they'd say about themselves.
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