Comment by tomp | Hacker News Reader

Comment by tomp | Hacker News Reader

> The WEF defines a shortfall as anything less than what’s required to provide 70% of a person’s pre-retirement income via public pensions and private savings.

Oh come on... why 70%? Presumably retirees don't have childcare costs, can downsize on housing, no more daily commute so savings on transport and lunch costs, ... Also, does "private savings" account for accumulated housing equity?

Also, I think that "retirement savings" are a fundamentally misguided economic policy... There's a fixed amount of wealth created at any moment (and a lot of it isn't transferable over time - in particular, labor, energy and food), so by "saving for retirement" we're actually causing a deflation (less money spent to buy same amount of wealth) and will cause an inflation when we start "spending retirement savings" (more money spent to buy same amount of wealth, so prices go up). This is a rat race, you only get ahead as long as you save more than others (similar to the housing bubble). The only sustainable solution is the working population to subsidize the non-working population (kids, students, retirees) in real time, year by year. If that math doesn't work out, we need to change it (make more kids who become new workers or make less retirees by having people work longer). Or post-scarcity economy of course.

> Oh come on... why 70%? Presumably retirees don't have childcare costs, can downsize on housing, no more daily commute so savings on transport and lunch costs, ... Also, does "private savings" account for accumulated housing equity?

I came here to say the same thing; was even typing it up. Then I paused. Healthcare (in the U.S. at least) is going to be at a crisis point in a decade. Prices keep going up and it isn't sustainable. Retirees will spend a large portion of their retirement income on healthcare.

I cannot understand why there aren't more retirees moving en-mass to Europe right now for medical care.

I think you are underestimating how difficult it is to get a long-term visa for most European countries. Someone who is not employed or is soon to retire without an extraordinary amount of wealth has virtually no change of gaining entry outside of refugee crises/political persecution or other unusual circumstances.

You've already gotta be pretty damn rich for the most likely outcome, even as a quite comfortably retired person who's careful not to overspend, not to be "hospitals and hospice care take all my money in the last few years, and I die nearly penniless".

We're rapidly approaching a time when leaving inheritance will no longer happen at all for nearly all people who've worked their whole lives (i.e. have never been owners, "capitalists", as their primary source of income). I mean I know there's not much there already, but soon that'll just not be a thing anymore. Healthcare expenses plus the death of pensions are going to cause some serious unrest in the next decade or two, unless we course correct hard and very soon.

I really don't know what to think about healthcare expenses... Like, dying pennyless makes sense! Why wouldn't you spend all your money just to prolong your life a bit longer? Obviously, our (civilization's) resources are limited, and we need to make decisions how to allocate them... EU countries decide by fiat (government says, we'll spend this much taxes on healing kids vs that much on healing old people), whereas US decide by market (rich people, young or old, can spend more on their own health). Personally, as technology improves, I really don't see us spending less on healthcare... after all, it's literally life, the most (individually) valuable thing there is!

> Why wouldn't you spend all your money just to prolong your life a bit longer?

Money doesn't work that way. Fixing the problems that can be fixed usually isn't a crippling amount of money.

And when hospice is expensive, it's not because any notable treatment is happening, it's just to give you a place to live.

In a steady state economy and accounting for compound interest, more value goes into retirement savings than get's pulled out. The delta is people dying with retirement savings.

In effect retirement increases economic activity by forcing huge numbers of people to save for benefits they don't receive.

Doesn’t saving money decrease economic activity? Seeing as the money is just sitting there, rather than being used to buy goods and services.

It’s not all just sitting there. Other people borrow it to spend it on things. The more people save, the more money is available to borrow and the lower the interest rates.

Even if saving decreases economic activity, I doubt it decreases it that much.

Why can’t I just give people money in exchange for their goods/services, rather than give the bank money, which then gives people money, that they then pay off by providing goods/services. What macroeconomic value does the bank provide serving as a middleman?

Safety, as having large quantities of cash in transit, at homes, or at business is risky and dangerous. Even banks try and avoid this as much as possible.

Convince, as writing a check or using a bank card allows for large and specific transactions. Paying rent every month via check for 1234.56$ is easy, with cash you need to count and recount etc. This is especially true for transactions over the internet.

Scale this up and you get into Logistics for large transactions like buying property. Verifying a 1,000,000$ Bill is not fake is one issue, as is trying to get change for huge denominations. On it’s own this would creat an ecosystem of bank like entities such as money exchanges with associated fees.

Efficiency, banks make use of deposits for loans which allows them to offer services at a discount. Remove that and people end up directly paying for this stuff.

Banks provide other services like transactions between physical and digital currency at ATM’s. The large unbanked population ends up paying high fees for many services banks provide.

By all means, if you desire to live paycheck to paycheck, immediately spending all of what you get, go for it. If you don’t, then you’ll have your answer as soon as you figure out why you don’t.

Money is an abstraction. If you buy a house the money is not just siting there it’s going to the prior owner. If they then buy some asset from another owner they can extend the chain, but eventually someone ends up spending the money.

For example, VC firms entire business model is based around investors generating economic activity by handing it to someone that’s going to spend it. Government bonds are another ‘investment’ that seems to sit around doing nothing, but the bonds are not money. The money was more or less instantly spent by the issuing government or handed to an earlier bond holder.

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