I mean, I understand that computers managed by typical users will be a shitshow, but much of the problem in that situation is that they don't really care.
The encryption scheme on iOS is nice, but for how much of a game they talk about privacy Apple had the opportunity to do so much more for security around identity/auth and they did approximately nothing.
Whether you like this implementation or not, the solution is to choose better passwords.
If somemone (burglar / law enforcement / intelligence agencies) breaks in, they have your passwords.
If you are memorizing a lot of passwords (I have 500+ in my password database) you are surely going to forget rarely used ones.
If passwords are written down, they can be demanded from you by a warrant/court order. If they are memorized, they cannot.
If your passphrase is an innocuous phrase, like "red dogs like spicy food", how will they you know you have a password to demand? How do they know you have a piece of paper instead of having it memorized?
Previously I tried to memorize passwords. I ended up forgetting a lot. It was frustrating trying to remember what my password was, or even whether I had an account on the site or not. The user experience of being able to ctrl+f through all the accounts that I have in my database is very refreshing.
I have a quite high value video game account, and 6 people have specifically targeted me. They've attempted various things, such as trying to exploit password reuse, and utilizing previous website database breaches that I was in.
I don't see what benefit the paper would have. Whether it's paper or a password manager, if my computer is compromised they'll get my accounts with a keylogger.
I've never lost my wallet, but my brother lost his a couple months ago. I never really change my passwords except when I was switching from my old crap password to unique strong passwords in my database. The problem with losing my wallet would be that I would lost access to all my accounts if that was the only copy of the paper. It would be an availability problem.