I rely on a large amount of closed-source software for a great many things in my life. I'm not sure why my password manager is notably different than any other software that manages particularly important information.

> Many folks trust & use PasswordSafe not because Schneier wrote it (I hope) but because it is open-sourced.

Virtually nobody that uses it is qualified to actually judge whether it's secure. At some point you have to put your trust in some person to tell you whether or not it's secure. In the case of a fully-audited open-source solution, you're putting your trust in the auditor to have done a good job. In the case of an open-source solution that was audited at one point but has continued development since then, you're putting your trust in a combination of the auditor to have done a good job and the original developer to have maintained the quality level of the software during subsequent development. In the case of an open-source solution that has not been audited at all, you're putting your trust in the developers, and in the anonymous collection of other people that may or may not have actually examined the source in any meaningful fashion. And in a closed-source solution, you're putting your trust in the developers.

The biggest problem I have with your position is you're making the implicit assumption that, just because open-source software makes its source available to the world, this means enough anonymous other people have independently audited the software in order to feel reasonably secure. But this assumption is flawed, for several reasons. First, just because the source is available doesn't mean anyone's actually bothered to read it, and even very popular projects can suffer from this problem if the project isn't particularly accessible to contributors (case in point, AIUI the OpenSSL source is pretty hard to grok, and historically has had very few contributors, which led to issues like Heartbleed). Second, if people do read through the source, this doesn't in any way mean that anyone who's sufficiently qualified to judge the crypto has done so. Thirdly, even if someone who is sufficiently qualified has read through the source, it doesn't mean they've done so in a rigorous-enough fashion to really qualify as an audit.

In the end, unless you personally are sufficiently qualified to perform an independent audit of the open-source software, and unless you personally have actually performed said audit, then you are ultimately just trusting people. Which is exactly the same situation you have with closed-source software.