Author Topic: UK study: Most of us die virtually penniless  (Read 732 times)

rcjordan

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UK study: Most of us die virtually penniless
« on: March 03, 2019, 05:28:58 PM »
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“This paper shows that for Britain, it was not the rise of a broad ‘middle’ class which characterized the changes in the 20th century wealth distribution but a reshuffling of wealth away from the top one per cent to the rest of the top 20-30 per cent. The vast majority die with nothing.”
http://www.lse.ac.uk/News/Latest-news-from-LSE/2019/02-Feb-19/Most-of-us-die-virtually-penniless-says-new-LSE-research

ergophobe

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Re: UK study: Most of us die virtually penniless
« Reply #1 on: March 03, 2019, 09:15:43 PM »
Remember Deep Thoughts with Jack Handy on SNL? One of my favorites was...

"I hope that when I die, people think back on me and say, 'Boy, that guy sure owed me a lot of money.'"

On some level, my goal is to die broke. The hard part is the timing. But one book that did a lot to fix my negative attitudes toward acquiring money was this one:
https://www.amazon.com/Live-Rich-Die-Broke-Seven-part/dp/1594860165

He said that many of his clients were miserable because they lived broke and another large part were miserable because they died rich.

Obviously, the problem is that most of those people with under GBP 5000 were probably broke for years before finally dying, which is sad and unpleasant.

In any case, I wonder what it is in the US. Unlike the UK, we have NOT seen "declining wealth inequality and the rise of the middle class," but rather the decline of the middle class and the rise of extreme income inequality. I have to believe most Americans die broke.

One friend of mine was a WWII vet and had a full career as a professor at a tiny college with, apparently, a tiny pension and if not for VA care at the end of his life, he would have been utterly destitute, possibly homeless. By all appearances, though, he would have been part of the 1950s to 1980s professional class.

littleman

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Re: UK study: Most of us die virtually penniless
« Reply #2 on: March 03, 2019, 10:03:01 PM »
>He said that many of his clients were miserable because they lived broke and another large part were miserable because they died rich.

The problem is getting the timing right!  For those of us with children it gets a bit more complicated.  I use to think that just getting them to adulthood and through college was enough, but now with all the dire predictions I feel like that's not enough.

buckworks

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Re: UK study: Most of us die virtually penniless
« Reply #3 on: March 03, 2019, 10:09:02 PM »
>> goal is to die broke

I have often told my sons that I'll try to leave enough money so they can go out for beer and pizza after my funeral. Anything beyond that will be a bonus!

>> The hard part is the timing

Yes. My husband and I have a balancing act right now between wanting to help our kids but also needing to make sure we plan sustainably for long lives of our own. Between us we have a number of relatives who lived (or are still living) into their late nineties or even over 100 so we need to keep that in mind for our own prospects.

My son the financial planner says that only a minority of the people he sees have any systematic savings plan for old age. He says that for most people their house is their biggest investment ... not because houses are such great investments but because it was the only investment that they worked at systematically over time.

ergophobe

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Re: UK study: Most of us die virtually penniless
« Reply #4 on: March 03, 2019, 10:20:47 PM »
The problem is getting the timing right!

I thought I had written those exact words, but I either didn't or I erased them. This exact problem has been a major topic, I think *the* major topic, in conversations with my wife these days. As I mentioned, my main 2019 goals is to get her to a place where she's working less, which brings on this discussion.

Quote
with children it gets a bit more complicated

Definitely. Many aspects to that, which is also something that crosses my mind a lot.

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Yes. My husband and I have a balancing act right

I'm crossing the streams here... but you mentioned in the retirement thread that you were "there" no (no need to work for money). I remember many years ago, through your affiliate work, you achieved that goal for Marcel so he could disregard money and pursue the things he cared about. So now you're there for both of you (based on what you said).

First, congratulations. Second, does the "balancing act" impact your continued client and affiliate work, or are you just doing what you enjoy and not considering kids (and grandkids) in that picture?

rcjordan

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Re: UK study: Most of us die virtually penniless
« Reply #5 on: March 03, 2019, 11:07:29 PM »
>money
>help children

I've seen a lot of money flow by to help/bail out children but I'd say that the vast majority of it did no good in the long term.

littleman

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Re: UK study: Most of us die virtually penniless
« Reply #6 on: March 03, 2019, 11:20:13 PM »
I've seen a lot of squandering as well and a lot of cases where adults do not have to act like grown-ups because they are being supported way too long.

An Econ professor I had was a big advocate of a 100% inheritance tax -- basically the idea was to leave nothing for the children and make inter-generational transfers of wealth impossible.   The notion was to make the playing field as level as possible and it would cause economies to have more just rules.  It is an interesting idea, but far from the way our current society is set up.
« Last Edit: March 04, 2019, 02:44:16 AM by littleman »

ergophobe

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Re: UK study: Most of us die virtually penniless
« Reply #7 on: March 04, 2019, 02:24:45 AM »
I've seen a lot of money flow by to help/bail out children but I'd say that the vast majority of it did no good in the long term.

Well, let's see... I have a niece who lived at home well into her 20s so she could go back and get her RN degree. A nephew who has lived with his parents into his mid-20s and gotten substantial assistance paying tuition for medical school, which he will finish in May.

So by LM's criteria of helping kids through college (say age 22), both of those are extended help beyond that, and are a huge leg up for those kids in life.

littleman

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Re: UK study: Most of us die virtually penniless
« Reply #8 on: March 04, 2019, 02:53:28 AM »
This is a nuanced topic.  Helping a kid get a leg up can have a dramatic effect on that kids life and the lives of subsequent generations -- we've probably all seen examples of this working.  On the other hand, I've seen people subsidized for way too long as they hop from one type of education to another in an effort to find themselves. In those situations, I blame the parents as much as the adult children.
« Last Edit: March 04, 2019, 03:12:27 AM by littleman »

ergophobe

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Re: UK study: Most of us die virtually penniless
« Reply #9 on: March 04, 2019, 03:48:40 AM »
This is a nuanced topic.

Yes, I wasn't trying to say it's always good, just that it isn't always bad. That's precisely what makes it hard for a parent. In fact, the debate about whether or not offering assistance is doing harm or help is also going on in my extended family.

It is often not obvious. It's hard enough to make those decisions with looser connections. Making those decisions with respect to children (or parents in some cases) is even harder. I just don't know what I would do, so I am reticent to judge parents who seem to be supporting kids past where they should.

>>100% inheritance tax

I was talking to me dad on a related subject. He's leaning toward putting most of his money into charity, with small amounts to some people he's close to (e.g. kids, godchildren which is a big deal for him) as a token to say he remembered them. He feels like if his kids are old enough that they shouldn't need help and it's not his job to help his grandkids. Like "take a vacation" money, not "buy a car" money.
« Last Edit: March 04, 2019, 03:54:30 AM by ergophobe »

buckworks

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Re: UK study: Most of us die virtually penniless
« Reply #10 on: March 04, 2019, 03:51:00 AM »
>> So now you're there for both of you

Yes. For those who haven't heard the story, my husband quit his job and went for a master's degree, enabled by my affiliate income. I got to brag that I was married to an A student!

>> does the "balancing act" impact your continued client and affiliate work, or are you just doing what you enjoy and not considering kids (and grandkids) in that picture?

Kids and grandkids are high on the list of what I enjoy. :-)

Re client / affiliate ... I  have one client these days, and affiliate work goes up and down. I can pick and choose what's interesting, I don't "have to" work. So I end up doing strange things just because they're fun ... such as proofreading a doctoral dissertation which I expect to receive this week.

>> adults do not have to act like grown-ups because they are being supported way too long

No ongoing support here, other than helping with grandkids' music lessons or sports fees. We've given a few surprise, no-strings $$ gifts when something went unusually well for us (e.g. website sale). In every case the $$ were put towards debt reduction, so used sensibly enough I'd say.

The biggest thing I'd like to do for grandkids would be some help with postsecondary tuition when the time comes. My grandmother paid for a year's tuition for me, and I'd like to do the same or similar.

Here's where the balancing comes in. How generous can/should we be for such things when we might have thirty years left to provide for ourselves? Or even forty if I were to live as long as my oldest uncle? To that question, add in some concerns about government pensions going broke ...

>> big advocate of a 100% inheritance tax -- basically the idea was to leave nothing for the children and make inter-generational transfers of wealth impossible

That would encourage older people to burn through their money instead of saving and investing, and increase the numbers who end up penurious. Not a good idea IMHO.

ergophobe

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Re: UK study: Most of us die virtually penniless
« Reply #11 on: March 04, 2019, 03:57:37 AM »
such as proofreading a doctoral dissertation which I expect to receive this week.

Can we bargain that down to this year? Theresa convinced me to take it off my goals last year to avoid hopping between projects and there were higher priority items.

>>the $$ were put towards debt reduction

A huge help in the long run.

buckworks

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Re: UK study: Most of us die virtually penniless
« Reply #12 on: March 04, 2019, 04:03:22 AM »
>> Can we bargain that down to this year?

Bargain as you wish.

It's someone else''s document that I'm expecting this week. :)

>> A huge help in the long run.

Yes. But it's not in a form that makes them dependent.
« Last Edit: March 04, 2019, 04:05:50 AM by buckworks »

littleman

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Re: UK study: Most of us die virtually penniless
« Reply #13 on: March 04, 2019, 04:15:40 AM »
>Not a good idea IMHO.

It does seem to fight against human nature.  I'd love to go back in time and ask some "what about" type questions to him.

I like the notion of investing in young grandchildren and I hope I am able to do so. 
Buckworks, congratulations on doing well enough from affiliate work to support your husband returning to school.


>That's precisely what makes it hard for a parent.

I agree.  Also, I think the emotions of love combined with fear are also a big motivation for those who continue to support their relatives beyond what most would find reasonable.

rcjordan

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