Why So Many People Intend to Die With Money in the Bank

[Oz investor]

well i am not planning suicide , currently ... so i do not know when i am going to die ( it MIGHT be weeks or decades )

now not having any savings looks like a good path to starving to death ( or not being able to afford medications )

and if the original article was meant as click-bait ( or an infomercial ) one should RUN AWAY from any financial service that suggests your last days should be spent as a destitute person

now i can't guarantee i will pass on with a well-stocked bank account , but suggesting i just spend it with complete disregard of forward planning

 

[disneysteve]

If I could know my expiration date

Bingo. How can you possibly spend all of your money before you die if you don't know when you're going to die?


The reality is that discretionary spending tends to be higher in the early years of retirement and start to slow down after 75 or 80 or so. But then you're still left not knowing how long you will live. 85? 92? 103? Who knows? You can't go on a wild spending spree leaving yourself penniless for the final years of your life.

 

[daylatedollarshort]

Those money are for emergencies that money can fix. The older one gets, the chance that more money is needed to fix problems (e.g. health) increases. Having the money ready means peace of mind.

This came up in a recent thread. Not just ourselves but a poster brought up an adult son who became disabled and needed care. We don't know when we will die or what twists and turns life will hand us along the way.

 

[Oz investor]

this came up in a recent thread. Not just ourselves but a poster brought up an adult son who became disabled and needed care. We don't know when we will die or what twists and turns life will hand us along the way.

absolutely +1

 

[NW-Bound]

Bingo. How can you possibly spend all of your money before you die if you don't know when you're going to die?

The reality is that discretionary spending tends to be higher in the early years of retirement and start to slow down after 75 or 80 or so. But then you're still left not knowing how long you will live. 85? 92? 103? Who knows? You can't go on a wild spending spree leaving yourself penniless for the final years of your life.

Bernicke's study shows that people start to spend less as soon as their late 50s. Indeed, our spending went down as we hit 60.

 

[audreyh1]

Spending may go way down during the middle retirement years. It’s that potential giant jump approaching end of life that’s scary.

 

[Safire]

The single most selfish thing I could do is to die utterly penniless. My soul would worry about my disabled son from beyond the grave. My hope is to leave him enough to live on until he passes on. We are already frugal but I expect to continue to pinch every penny until it squeaks even in retirement.

I just pray that neither DH nor I become sick and up needing expensive long term care. Thay would have a simply devastating effect on DS' inheritance. We'd rather be dead at that point than be alive and siphoning off funds intended for his care after our time, to our care, instead.

 

[icono5]

I find myself caught between wanting to be generous (with heirs, with charities, etc.) and dealing with what I call the "structured insecurity" of wondering whether I'll have enough.

 

[big-papa]

Spending may go way down during the middle retirement years. It’s that potential giant jump approaching end of life that’s scary.

This.
Save enough and be fortunate enough to be able to live happily during the majority of retirement, but with enough excess to take care of high expenses that may occur towards the end. If that doesn't happen and you don't end up spending it all, is that really a bad thing if you were able to have otherwise lived happily? And is it really a bad thing if others, of your choosing, benefit from the excess?

 

[pjigar]

The single most selfish thing I could do is to die utterly penniless. My soul would worry about my disabled son from beyond the grave. My hope is to leave him enough to live on until he passes on. We are already frugal but I expect to continue to pinch every penny until it squeaks even in retirement.

We have an intellectually disabled son so we are in the same boat. In fact, I am the engine that needs to pull three generations! Ourselves, My dad and my son. I have been blessed to be able to do that without scarifying our quality of life today or in future. My income jumped in high gear a year after my son's birth so we say god planned for his life by kicking my income in high gear.

 

[UnrealizedPotential]

For me the answer is I do not have any idea how long I will live so the goal is to create an income on my assets while still leaving intact my asset base so it can grow for the future. At a yet to be determined point in my life, I may make the decision to spend down more what I have, but that would depend on my age and what the circumstances are.

 

[Sniggle]

On my death bed I hope that I can reflect on the fact that my DW has enough money to live the rest of her life as she chooses and that my son has enough inheritance to give him some freedom.

As others have mentioned, if I knew the exact date and time of my demise, I could spend with more confidence.

 

[skyking1]

Saving and investing are lifelong habits. Most times it involves LBYM for many years. To flip that model and BTD is akin to quitting smoking. It just does not happen easily.

 

[finnski1]

I'm not sure it is even phrased correctly. I never"intended" to die with money in the bank. I think it is just a by product of how many of us on here are wired. We are wired to save diligently, invest for the future and hope for the best. The goal is to not run out of money before running out of life. Not the other way around.

 

[Music Lover]

For most people here, unless you're completely foolish how can you possibly run out of money? You'll have SS, many for 2 people, plus a house you can sell. Some of you will be getting $6000 a month in SS until you die. You might have to live leaner but you can't run out.

 

[NW-Bound]

I don't worry about not spending it all, that's not why I blow the dough. I blow dough on what I want to blow it on. Food, drink, travel and home improvements.

I am sure people spend money on what makes them happy.

I just don't want much, and don't think that is a problem.

 

[SnowballCamper]

Sloppy research makes me snarky. I say sloppy, because the prudent thing to do is have some focus group meetings to get your questionnaire right. Then you don't have this problem:

“There’s just something we’re not getting quite right in understanding how people navigate retirement,” Lori Lucas, the president and chief executive officer of EBRI, said March 24 in announcing the results.

In standard finance and economic theory, saving for its own sake makes no sense because the only purpose of money is to pay for things, which could include bequests.

Close to two-thirds of respondents agree somewhat or strongly that “saving as much as I can makes me feel happy and fulfilled.”

And the other third have no opinion, which means that over 2/3 do not have a strong opinion about the statement, "Saving as much as I can makes me feel happy and fulfilled." To me this means that the survey hasn't identified why people save, and why would it? It's written by people than can't conceive of not spending money. And here comes the self licking ice-cream cone:

Certainly their heirs will benefit someday from their needless frugality. From another perspective, though, it’s a problem. Frugality can be evidence of fear. That comes through clearly in the second chart, where “saving for unforeseen costs” is the No. 1 choice. It may even be lurking behind the third chart. When retirees say saving as much as they can makes them feel happy, are they actually saying that not saving makes them unhappy? Nervous, perhaps?
Financial engineering can help.

No we're not saying that not saving makes us unhappy--if you had done a focus group you might find possible answers to this, and included them as options in your survey. But instead you can only conceive of the solution that your industry has come up with. Assume we're scared, and take more of our money to help us feel safe.

I think Morgan Housel does an excellent job of saying why one should save (in his book, The Psychology of Money). It is the most basic step in risk management. We realize we don't know the future, but we can live below our means, we're not afraid, and therefore have the ability to do our own risk management without paying someone else.

Thanks for reading...rant over

 

[Gumby]

...
I think Morgan Housel does an excellent job of saying why one should save (in his book, The Psychology of Money). It is the most basic step in risk management. We realize we don't know the future, but we can live below our means, we're not afraid, and therefore have the ability to do our own risk management without paying someone else. ....

The young wife and I were discussing this very thread over dinner last night and came to the same conclusion. We don't know what difficulties the future will bring us, but whatever they are, it will be easier to face them with a fat wallet.

 

[bada bing]

The mechanical answer is easy - it is almost impossible to run an annuity for a group of one. You have to die with money in the bank because you have almost no statistical prediction power on your own individual lifespan. If you want to die with no money, join a group large enough for accurate statistical prediction - buy an annuity with all your money.

Note that I'm not recommending annuities generally. By managing your money individually, you can draw almost as much fairly safely for ongoing income and also probably leave a large legacy. For most people that's a more attractive option. It doesn't have to fall into some psychological analysis of why old people are misers.

 

[TheWizard]

The mechanical answer is easy - it is almost impossible to run an annuity for a group of one. You have to die with money in the bank because you have almost no statistical prediction power on your own individual lifespan. If you want to die with no money, join a group large enough for accurate statistical prediction - buy an annuity with all your money.

Note that I'm not recommending annuities generally. By managing your money individually, you can draw almost as much fairly safely for ongoing income and also probably leave a large legacy. For most people that's a more attractive option. It doesn't have to fall into some psychological analysis of why old people are misers.

I have some payout phase annuities with TIAA, purchased with a PORTION of my tax-deferred accumulation back in 2013.
Especially after I started SS at age 70 last year, I now have significantly more income in retirement than I can REASONABLY spend.
(I do expect to spend more on travel before long!)
So I invest thousands of dollars each month in my taxable investment account, all in stock funds.

And I don't start RMDs until next January.

So the idea that annuitants will somehow die broke is amusing, but quite incorrect...