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Comment by legitster | Hacker News Reader

I had an economics professor who commented offhand that, while we spend so much energy debating wealth transfer from rich-to-poor (or vis versa), the entire US economy is functionally built to transfer wealth from young to old.

Part of the reason affordability is so bad is that we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever. And US financial policy specifically encouraged real-estate to be a primary vehicle for that wealth.

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> the entire US economy is functionally built to transfer wealth from young to old.

Until the old die, which they inevitably do, and then the transfer completes the cycle back to the young.

>largest, wealthiest population of non-working adults (retirees)

What does that have to do with affordability?

Most of the current income of these "retirees" is based on the work they did earlier in life (Soc. Security[0], 401k/IRA withdrawals). Further, you seem to be conflating "non-working" with being non-paid. Many of these retirees are providing unpaid daycare to grandchildren, unpaid assisted living service to other elder family members, or volunteer positions in the community.

[0]Yes, I understand that today's Soc. Security is funded mostly by today's wage earners, but not all of it. On an inflation adjusted basis, a good chunk of Soc. Sec. benefit is just the taxpayer's own FICA taxes that have been earning interest over time coming back to them, as well as the income taxes they pay on those very same Soc. Security benefits.

> Until the old die, which they inevitably do, and then the transfer completes the cycle back to the young.

It will transfer to the middle aged who will become the old soon. It won't cycle back to the young.

Fentanyl doesn't affect the old affluent equitably.

My great granddad died at 90, my grandad is 93.

Lord knows how old I'll be when I inherit...

> It will transfer to the middle aged who will become the old soon.

It will transfer into the health care system and wealthy share holders.

^^^ This!

All but the wealthiest of retirees who make it into their 80’s and 90’s will spend any money they have on healthcare, until they are broke and then go on Medicaid.

As well as other participants https://news.ycombinator.com/item?id=38098779

The middle aged (parents) are the ones who are helping their kids. And pay the majority of the taxes that fund almost everything.

The ‘living with your parents’ meme may be tough - but not nearly as tough as having homeless parents!

When my grandparents died and my parents' generation inherited the wealth, half of them were already retired.

So there's a pretty decent chance that the old dying are leaving the wealth to the old as well.

How can you be so confident with that prediction?

There are some families where relationships with grandkids are much more positive than with direct descendants. Families where middle aged don’t need any help, but grandkids could always appreciate a boost to the college fund. Families where the bridges have been burned badly and the money is going to the charity just because. Families where grandpa is on the reverse mortgage busy traveling the world, etc.

I'm not sure I'd say a 90 year old dying and transferring their wealth to their child a few years before that child retires "back to the young." The largest collectors of inheritance are those above the age of 50.

401k/IRA income comes from the market, just as property value does. So in a roundabout way, you are benefitting from the economy as a whole and the earnings of others. (Not to say that it's bad, but Baby Boomers are going to reap much more from this than previous generations).

> Many of these retirees are providing unpaid daycare to grandchildren, unpaid assisted living service to other elder family members, or volunteer positions in the community.

Agreed! But at a much lower rate on average than 40hrs/week!

> Until the old die, which they inevitably do, and then the transfer completes the cycle back to the young.

No, most of the boomer wealth will be transferred to private equity (who now own the majority of long-term care facilities), the hospital executives, the health insurance executives, big pharma executives, and a good number of doctors on the gravy train.

The next generation will get very little of that wealth.

> On an inflation adjusted basis, a good chunk of Soc. Sec. benefit is just the taxpayer's own FICA taxes that have been earning interest over time coming back to them,

When Social Security was created, the first recipient started receiving checks in 1940, 5 years after the program was created (https://socialsecurityreport.org/a-fascinating-look-at-socia...). It may be politically expedient to spread the untruth that it is an investment fund, where the old gets back what they put in after investments. But in reality, Social Security seems to be just another tax system, taxing the young and working, to pay for the old and unhealthy.

Because baby boomers form the largest demographic group in the country, they will continue to extract everything from the younger generations as they grow older, then they will give all that money away to billionaires of private equity funds who own the majority of long-term care facilities in the country.

> we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever

This is an interesting topic that doesn't seem like it gets a proportional amount of attention. What becomes of those assets as that generation gets too old to live in their own homes or dies? For retirees that have chosen to "age in place" in their oversized homes (i.e. built for 4-5 people, but now holding 2), what becomes of those properties. This is one way the housing "crisis" could sort itself out.

Here's an honest question: assuming that wealth is getting transferred from one party to another in any system you choose, why is this less desirable than another configuration?

The situation is more acute in developed countries where older people outnumber younger people. There is very little likelihood of reform in those places.

I came here to say this, but you said it way better. I don't think it is understood enough that the older population is getting and keeping wealth at an accelerated rate. The entire concept of 30 year treasury bonds transfers debt of the current generation onto the next and nobody seems to question it.

Younger generations just understand that the system is rigged and have looked for other methods (socialism) to even the playing field again. They aren't wrong in their goals, but current proposals are sadly ignorant.

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