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

[FIREd_2015]

Article in Bloomberg must have interviewed some people on this forum. Time to go out and spend some money.

"...There’s a school of thought that you should spend down all your assets in retirement and “bounce the check to the undertaker,”..."But not many Americans subscribe to that school of thought...only 14.1% of respondents think they’ll spend down all their assets...The most intriguing answer in this second chart is “makes me feel better.” ...saving for its own sake makes no sense because the only purpose of money is to pay for things... It’s undeniable, though, that a lot of Americans are underspending in retirement."

https://www.bloomberg.com/news/arti...y-people-intend-to-die-with-money-in-the-bank

 

[audreyh1]

A lot of people have heirs they wish to pass money too.

Many retirees have anxiety about running out of money in their old age. This is a valid concern and even with more aggressive spending, you are probably going to leave a pile at the end just in case - and those just in cases are real and can be quite expensive, LTC for example. As a result, increasing spending now can cause anxiety.

I get the impression that some folks are so used to spending less if they can, that it’s easier to just let the investments build.

We hope to draw down a significant amount of our assets, but definitely will leave money in the bank for later in life large expenses. It might not even be us, it might be close family members.

 

[Gumby]

The consequences of running out of money before we run out of life are far more severe than the converse. And we have limited control at best over the events that could result in our running short of money. In the face of that risk and that uncertainty, keeping some funds squirreled away is the rational thing to do. Even the dimmest bulbs among us (raises hand) realize that.

 

[Fermion]

If I could know my expiration date I definitely would spend down to the last dime as we have no children to leave money.

I really don't want to be a Wal-mart greeter at age 85 though. Not that there is anything wrong with those who do that, I just don't like the fact that they park the scooters (which always smell like someone took a poo in them) near the greeting area.

 

[Midpack]

A lot of people have heirs and/or charities they wish to pass money too.

Many retirees have anxiety about running out of money in their old age. This is a valid concern and even with more aggressive spending, you are probably going to leave a pile at the end just in case - and those just in cases are real and can be quite expensive, LTC for example. As a result, increasing spending now can cause anxiety.

I get the impression that some folks are so used to spending less if they can, that it’s easier to just let the investments build.

We hope to draw down a significant amount of our assets, but definitely will leave money in the bank for later in life large expenses. It might not even be us, it might be close family members.

+1 on all counts.

Unless it’s for beneficiaries, no one chooses to die with a pile of cash. It’s just that there’s no way to die broke unless you put all your money in an annuity (not recommended).

 

[Midpack]

If I could know my expiration date I definitely would spend down to the last dime as we have no children to leave money.

I really don't want to be a Wal-mart greeter at age 85 though. Not that there is anything wrong with those who do that, I just don't like the fact that they park the scooters (which always smell like someone took a poo in them) near the greeting area.

Your point is valid but that’s not even an option anymore, eliminated 2 years ago.

https://www.cbsnews.com/news/walmart-panned-for-move-to-eliminate-greeters/

 

[ExFlyBoy5]

Your point is valid but that’s not even an option anymore, eliminated 2 years ago.

https://www.cbsnews.com/news/walmart-panned-for-move-to-eliminate-greeters/

Not really eliminated, the position name was changed. Our local WM has had two at each door for a while and they are most likely over the age of 65.

 

[Running_Man]

Median net worth of 75 year olds, which includes house is 256K so I don't think most people die with a lot of money in the bank.

As usual the article ends with a reference to Wade Pfau, who is always encouraging more spending.

 

[skyking1]

We have no heirs, but self insuring for LTC.
This means the nest egg will never be totally wiped out, with any luck.
I have no qualms about leaving a significant chunk to our preferred charities. If we are feeling generous or otherwise obliged to nieces and nephews who have been kind to us in our old age, that will alter the wills accordingly.

 

[W2R]

The consequences of running out of money before we run out of life are far more severe than the converse. And we have limited control at best over the events that could result in our running short of money. In the face of that risk and that uncertainty, keeping some funds squirreled away is the rational thing to do. Even the dimmest bulbs among us (raises hand) realize that.

+10000

This says it all and Gumby is absolutely correct. Whoever wrote that article is a nutcase IMO.

 

[gayl]

We have no heirs, but self insuring for LTC.
This means the nest egg will never be totally wiped out, with any luck.
I have no qualms about leaving a significant chunk to our preferred charities. If we are feeling generous or otherwise obliged to nieces and nephews who have been kind to us in our old age, that will alter the wills accordingly.

Have heirs while self-insuring for LTC (although that's not in our culture .... we age in place) but I don't want to scrimp in my 90s

 

[audreyh1]

As usual the article ends with a reference to Wade Pfau, who is always encouraging more spending.

And likes annuities.

But annuities don’t help with potential late in life large lump sum needs like LTC.

 

[ponyboy]

If you love your kids, dont leave them money.

 

[FANOFJESUS]

Maybe it is because people saved more money than they have wants for. I find myself wanting less and less as I age.

 

[daylatedollarshort]

I could die today or live to be 120. I think I'll have enough to worry about if I live to be 120 that I don't need to add running out of money.

These kinds of articles always assume spending more money equals more happiness, but that is what advertisers would like us to believe, not what most actual research on happiness shows. While financial security helps with happiness, most studies link excess materialism to negative traits like insecurity, anxiety and depression. I like watching videos and reading up on the latest happiness studies. They are real money savers. The longest running study on happiness found social connections were the biggest factor in a contented life.

 

[Aerides]

I do think there's a tendency, for some people, to derive happiness simply off their balance sheet, and to stay super-frugal with no good reason. But that's not a huge number.

The rest between heirs/charity, and didn't-realize-i'd-get-so-old-so-quick, kinda stuff.

And beyond that, deep insecurity about the potential costs of a devastating illness, with or without LTC policies.

 

[friar1610]

Maybe it is because people saved more money than they have wants for. I find myself wanting less and less as I age.

Except for experiences (such as travel or plays/concerts) or minor “stuff” (like a comfy pair of walking shoes every so often) that describes me.

 

[daylatedollarshort]

For me I would also rather leave money to our kids and charities than have it go to CEO $20M salary. When we lower our energy bills, it is better for the planet and means more money for our kids or charity instead of going to some overpaid utility company executive: CEO of Bankrupt utility PG&E Earned $18.5M in 2019.

 

[RobbieB]

I saved the dough when I was working so I could retire and then blow the dough I'd saved. Easy.

 

[ncbill]

They never ran out of money but DW's grandparents divvied up their only significant asset (farm) between all their kids once they hit 65.

They still lived there as long as possible...grandfather went from home to hospital to funeral home around age 90, grandmother spent her last decade or so living in a basement suite at her daughter's home before dying in her late 90s.

 

[NW-Bound]

If I include my homes in my net worth, I can live on 1% WR, even if SS goes to 0 which I know will not happen.

So, I am not worrying about being broke, given that I may have only 20 years left.

But going out to blow dough on things I don't care about? Nah. I will step up the gifting and donation.

My kids may go straight into ER with the money we will leave them, but my wife may have at least another 25 years. By that time the kids are not really that young, and will be older than when we ER'ed. I do encourage them to save money, and they may just be able to ER without our help, which is what I want to see.

Ah, money, money... Why do people have to worry about not being able to spend it all? Why do you have to? When we buy something, we still ask ourselves if we overpay for it. I hate to be taken advantage of. On the other hand, a generous tip is not something wasted. It's just like any gift.

 

[RobbieB]

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.

 

[jollystomper]

I sacrificed a few minutes of my life to look at the article (at least I had cool music playing while I read it). It seems more like an advertisement for LTC insurance and annuities than anything else.

 

[qwerty3656]

If you love your kids, dont leave them money.

I can see not giving a 20 year old a bunch of money, but my expectation (if the Lord tarry is my kids will [at least] be in there 50s when we both gone.

 

[teetee]

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.

People with the thinking on saving enough for living costs does not have risk factor in their calculation. If things go well until you pass, great. If not, your problem becomes others' liability which is not a responsible thing to do. Unfortunately lots of parents think it's their childrens' responsibility to support them financially when they run out f money which is not something I would do to my children.