4 ms·

You can absolutely die with zero: buy a life annuity and let someone else worry about the problem.

ghaff 4y ago
I think parent is saying that you can't die with zero if you plan to live off dividends. (Because you need to keep owning the stock throwing off the dividends.)
- NovemberWhiskey 4y ago
  OK sure; same's true of bonds or CDs or any other asset type though no? The point is that "invest in equities with dividend reinvestment until retirement and then buy a life annuity" is a totally viable strategy. That's basically the way pension saving in the UK works historically, for example.
  - ghaff 4y ago
    Right. Life annuities may or may not be a good deal. But that's certainly the main way to not be essentially forced to pass on assets. (Modulo real estate you own and are living in.) And, as you say, defined benefit pensions basically work the same way--although, in the US, current ones are fairly uncommon outside public sector--although a lot of people still have them from years past. Just to add. Bonds and CDs do have durations though so you can essentially do your own actuarial calculations to a certain degree.
    - NovemberWhiskey 4y ago
      In the UK this is actually the typical pattern for defined-contribution schemes; I haven't looked recently but it used to be the case that you were legally required to buy an annuity with 75% of your tax-deferred retirement savings.
      - ghaff 4y ago
        Interesting. I'm not sure how common annuities outside of defined benefit pensions are in the US. My impression is not very. I've noticed them mostly in the form of charitable trusts (which can offer the benefit of basically shielding large asset gains from taxation). But it doesn't seem to be a widely-used investment strategy in general. Maybe it's more common if someone doesn't have an interest in passing down any money.
      - rgmerk 4y ago
        You’re not required to any more, but there are heaps of people on annuities there. I haven’t read anything about it yet but a lot of them must be in pretty awkward straits because most aren’t fully indexed to inflation…
      - gpderetta 4y ago
        The rules were changed some time ago; also buying an annuity hasn't been worth it for a while.
- 8note 4y ago
  I'd expect a good portion of deaths involve very expensive health care for the last few months or years of life. Live off dividends, then sell to pay for the healthcare right before you die
  - rgmerk 4y ago
    In the US. In most other developed countries a) healthcare is funded by the government (to a first approximation). b) end-of-life healthcare expenditure is considerably lower outside the US.
    - ghaff 4y ago
      And Medicare for those 65 and older in the US is funded by the government.

I think parent is saying that you can't die with zero if you plan to live off dividends. (Because you need to keep owning the stock throwing off the dividends.)

NovemberWhiskey 4y ago
OK sure; same's true of bonds or CDs or any other asset type though no? The point is that "invest in equities with dividend reinvestment until retirement and then buy a life annuity" is a totally viable strategy. That's basically the way pension saving in the UK works historically, for example.
- ghaff 4y ago
  Right. Life annuities may or may not be a good deal. But that's certainly the main way to not be essentially forced to pass on assets. (Modulo real estate you own and are living in.) And, as you say, defined benefit pensions basically work the same way--although, in the US, current ones are fairly uncommon outside public sector--although a lot of people still have them from years past. Just to add. Bonds and CDs do have durations though so you can essentially do your own actuarial calculations to a certain degree.
  - NovemberWhiskey 4y ago
    In the UK this is actually the typical pattern for defined-contribution schemes; I haven't looked recently but it used to be the case that you were legally required to buy an annuity with 75% of your tax-deferred retirement savings.
    - ghaff 4y ago
      Interesting. I'm not sure how common annuities outside of defined benefit pensions are in the US. My impression is not very. I've noticed them mostly in the form of charitable trusts (which can offer the benefit of basically shielding large asset gains from taxation). But it doesn't seem to be a widely-used investment strategy in general. Maybe it's more common if someone doesn't have an interest in passing down any money.
    - rgmerk 4y ago
      You’re not required to any more, but there are heaps of people on annuities there. I haven’t read anything about it yet but a lot of them must be in pretty awkward straits because most aren’t fully indexed to inflation…
    - gpderetta 4y ago
      The rules were changed some time ago; also buying an annuity hasn't been worth it for a while.
8note 4y ago
I'd expect a good portion of deaths involve very expensive health care for the last few months or years of life. Live off dividends, then sell to pay for the healthcare right before you die
- rgmerk 4y ago
  In the US. In most other developed countries a) healthcare is funded by the government (to a first approximation). b) end-of-life healthcare expenditure is considerably lower outside the US.
  - ghaff 4y ago
    And Medicare for those 65 and older in the US is funded by the government.