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I suspect a lot of this is holdover from the Great Recession and our very impermanent society.
I was ready to graduate college when the markets crumbled in 2008. We had no clue what lay ahead. There were was tons of financial carnage from new graduates to senior citizens. At least for awhile, people became a bit more financially conservative.
Today's society is just extremely unstable. I've been fired with no notice before and no idea that anything was even wrong. Jobs are rarely secure. Markets gyrate wildly. The news cycle is full of craziness and instability, and that leads to people not being able to plan well.
I can't blame people for sitting on their wealth when things seem wild.
Yes. This is America. All decisions must be financial. Everything else s secondary. No one will help you so you better be able to throw enough money at any problem.
The problem would be solved if we could only know the date of our impending death. If you might live until 100, you should hang onto your money for your future years....you aren't denying yourself the fruits of your labors, you're being smart. OTH, if you are going to die at 65, you could spend all that money now. But nobody knows.
It's common sense to hang onto it in case you have a longer life than you thought...it's security.
This isn't the first time that "consumers" were encouraged to go out on spending sprees.
A consumer economy depends on people constantly spending, spending and then spending some more.
If you go google "retirees not spending their money" you can find articles going back years saying the same as the OP' article.
This isn't the first time that "consumers" were encouraged to go out on spending sprees.
A consumer economy depends on people constantly spending, spending and then spending some more.
“Wealth is getting more and more concentrated among households that are averse to spending it,”
That's even more true of the corporate entities sitting on cash - waiting it out.
Quote:
...they end up denying themselves the fruits of a lifetime of hard work.
Or... they conserve the fruits of that lifetime of hard work.
Quote:
Their heirs eventually benefit, but the vitality of the American economy suffers.
say la vee ...but thy retiree's and their kids will still have all/most of their assets.
Everyone who voted for the orange lunatic... stand up and applaud him.
The retirees with money are looking at two scenarios: (1) die with money left behind, vs. (2) run out of money before death. In the very individually (as opposed to group) rational system we have, the backstop for those running out of money is thin to non-existent. So, it is completely rational to try to eliminate the chance of scenario (2), making scenario (1) more likely. This has as much to do with the asymmetry of the costs/consequences of the two outcomes.
The asymmetry can be reduced if there were a backstop such a social welfare system which that guaranteed adequate care of the aged retirees (including those who run out of assets late in life). But, that is definitely not happening.
This is exactly where I am. I've realized that if I could be reassured of a taxpayer-funded safety net for when I can no longer take care of myself I'd spend more- yes, even pay more taxes to support it. But there are no such guarantees other than Medicaid and other needs-based programs. You might get into an excellent LTC facility that accepts Medicaid patients, close to family, with Wi-Fi and a library- or you might be "warehoused" someplace on the other side of the state and if they feed you meals of canned food and plop you in front of a TV in a "recreation room" all day and wait too long to change your Depends, well, too bad.
So, DS and DDIL will probably have a nice legacy when I leave this earth.
Basically they are saying for the good of the country please spend all your money. The Fed is tapped out of ideas, the youth are in debt up to their eyeballs and only you, the retirees of today who have saved, can save the country from falling into a recession or worse.
That's even more true of the corporate entities sitting on cash - waiting it out.
Or... they conserve the fruits of that lifetime of hard work.
say la vee ...but thy retiree's and their kids will still have all/most of their assets.
Everyone who voted for the orange lunatic... stand up and applaud him.
Many corporations and individuals enjoy having strong balance sheets.
I found the following from the link interesting and in many cases true:
Many clients think they’re doing something wrong if they spend money in a way that causes portfolio balances to drop. “Never touch the principal” is classic advice that’s a relic of an era of double-digit interest rates, when even conservative investments could produce substantial income. Despite ultralow interest rates, advisers say it can be difficult to persuade retirees to tap savings rather than just live on their tiny bond coupons and dividend checks. “Wealth is really a source of identity for people,” Fellowes says. “By spending their wealth, they’re losing some of their identity. There’s an aversion to seeing their balances go down, even if it’s excess wealth” that they’ll never need.
Many corporations and individuals enjoy having strong bLance sheets
Having a strong balance sheet is not directly related to whether or not you'll be spending.
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