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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.
Furthermore, most people who build up assets on their own combine hard work and good fortune with responsible spending habits. Those aren't going to change because some 'financial adviser' thinks it is better for the economy.
It is a tussle between individual rationality vs. group rationality. We cannot ask the retirees going into their diminishing capacity years to be big on the group welfare and risk scenario (2) while teaching them to be in individually rational throughout their lives.
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.
There is no such thing as excess wealth.
Life can toss stuff at you that was never anticipated. What if you have a grand kid whose born severely disabled? What if your kid has been very responsible in life but gets injured or suddenly loses his/her job? What if parents live much longer than averages, and end up needing some financial help at very elderly ages?
I'd just as soon spend as I'm comfortable, and be ready to handle life's unexpected events.
Pissing away "excess" money just to "enjoy" yourself seems a bit nonsensical to me.
Someone else can purchase on credit (a car, a house, groceries, medical care, gasoline, restaurants, entertainment, vacation, etc) ONLY BECAUSE someone else saves. Credit is financed through someone else savings.
crap, lots of crap..go buy another new car, a second home, clean out the dollar store, buy every pair of pants in Kohl's
On another Board I'm on, I started a discussion on the "fast fashion" trend in clothing (buy new cheap knockoffs of whatever is in style this season, throw it out or "donate" after 1 or 2 wearings), and one woman went and counted how many blouses she had. There were 105 of them, some still with tags on. Watch Marie Kondo's "Tidying Up" on Netflix as she has people pile all of their clothing onto a bed before sorting it out, Some have piles that reach the ceiling.
There are plenty of people going out and buying all that crap every week. They don't need me to add to it.
I'm living in a senior Mobile home co-op in Tucson, and I decided to head up an Art Fund Drive to put some art work/statues, sculptures in our artless community plaza. I kicked it off with a $250 donation, and I requested that 200 individuals in the park contribute $10 each.
It's been 6 months now and the fund is barely over $400, not enough $$ to buy anything decent. The office assistant said that you have to remember there's people barely scraping by here, and $10 is a lot of $$.
Ok! I asked for too much! Then how about $5 each and that would bring the fund up to $1250.
I was in accounting for 10 years and I have a keen nose for those scraping by and those that could write a check for $1000 or $5000 and not miss it the next day. One theory of mine is seniors are living under a veil of fear, fearful SS will run out some day, along with Medicare and better not spend it.
I ran into a man walking his dog the other night. He told me he just spent $6000 on an operation for his dog, and $1000 to remove 5 teeth. And not even $5 for the art fund? Scraping by?
I've grown so disgusted with it all I'm now going to request the Board refund the donations to the donees and close it down.
I had put together a nice catalog of potential works of art, for people to look at, and I added that anyone giving to the art fund would be able to vote on which art work they prefer for the plaza.
I hear your frustration, but maybe no one cares for public art and is happy with landscaping.
I am blessed in retirement and live in a lovely active adult community in Palm Beach County.
Bit no one here, including me, cares about 'public art'!
Nobody lays on their deathbed and says, gee I wish I saved more money.
No, but at that point they won't need any more money.
I can picture people saying that when they're retired and they need to replace the roof or the car transmission or they need a dental implant or one spouse just died and SS has been reduced by 1/3 to the Survivor benefit from what the husband and wife were collecting, or when they're looking for a LTC facility that takes Medicaid from Day One.
The author of the link may also have a perspective that retirement wealth is unequally distributed and the haves are sitting on unused wealth and others are living day to day.
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