Why are middle class conservatives dying without life insurance and savings?

[Voyager]

@bump

That said, I don’t think the employer should be on the hook for economic downturns either. That’s a big problem with defined benefit pensions; they put the company on the hook for a fixed amount whether or not the company is profitable or if the investments meant to fund it are doing well. Most can’t hack that- only governments can somewhat reliably do that.

Since most 401Ks got out of company stock, the biggest risk is not contributing or being forced to withdraw funds. And most of us are covered by a defined benefits plan, Social Security. You can get suboptimal returns depending on when you start taking money out, but you can’t really screw it up too badly.

[doreen]

The net cost per thousand is $3.60 while the net costs per thousand for the “do it yourself” options range from $0.08 to $9.80. Most of the “do it yourself” options are between $2.50 and $6.80, so the targeted funds are right in the middle.

[nearwildheaven]

Did they raise it? Just because they ask for it doesn’t mean they do.

As for the subject header, maybe they think God will provide? Who knows.

[doreen]

I didn’t check - but Idoubt it. Certainly not from our family - those of us who could afford it would rather spoil our own kids/grandkids than participating in spoiling hers. Point is that setting up a GFM doesn’t necessarily mean the people doing so lack resources.

( or even had the expenses. My sister’s ex-husband died earlier this year. As my nephew is his next of kin ( the half-sibs are only about 10) the arrangements fell to him. Ex-BILs sister set up a GFM for funeral expenses and did not give my nephew all the money raised which wouldn’t have covered the entire cost anyway)

[bump]

@octopus

Right. People have to liquidate houses and vehicles all the time and that is unfortunate. In many ways buying a house is not a great idea with regards to long term financial diversification. Studies suggest that renting is a winner and is less risky. One issue is that housing markets being local and the job one has is typically local means that if a large employer or a region go into decline so does the real estate market. It’s risky. If we lived in an area that didn’t have a diverse economy we’d be renting. That said, we also lost a bit of money selling our previous house. That happened due to buying at a top of a known bubble and selling after the bubble collapsed. People knew that there were poor fundamentals in the housing market.

Good point. In general, if you had $200k to invest, you’re better off investing it and paying rent. You may not make as much overall in income, but you’re far better protected from vagaries in the real estate market.

But… people still need somewhere to live, and few people have $200k on-hand to invest, while many have the ability to get a mortgage for $200k. So it’s imperfect, but it’s the best many can do considering their circumstances. Most don’t have the patience or discipline to pay rent and sock away money for investment, but they can manage to pay a monthly mortgage. And after a few decades, they own an asset outright that they can live in, sell, or rent out.

It’s maybe not optimal, but it’s a better deal than most available to the average person.

[BippityBoppityBoo]

Hey, @bump~~ Happy birthday!!

[bump]

Thanks! I appreciate it.

[JohnT]

Sorry for the delay in responding - I got involved in helping move my niece to Corpus Christi, then the Karen Carpenter thing took a week of my attention, etc.

@Icarus

So, if I am understanding the OP correctly, you are asking why someone who is wrong about “A”, wrong about “B”, wrong about “C”, and wrong about “D”, then why are they also wrong about “E”? Is that it?

It can appear that way, but the OP was more interested as to why those who are ideologically most invested in the capitalist system are not taking advantage of it. Is it their fault, is it the system, is it the products themselves?

@Voyager

I didn’t quite get the data on conservatives being hurt worse by the new system, but it is plausible. The reason would be overconfidence that drives libertarian/conservative behavior. Why have a company decide for you if you think you are the best stock picker on the planet? A few years ago one libertarian was vehemently opposed to the FDA since he was convinced that he could analyze drug safety better than those durn doctors. Thaler and Sunstein found that in Sweden, with a national pension plan that involved picking from a reasonably large number of funds, members do a bad job investing, tending to buy at the top due to better performance up to that point.

I didn’t really provide ‘data’, per se, but the vast majority of these stories had mentions and links to GoFundMe’s, etc.

@Voyager

Conservatives also may not be that great at predicting consequences or how to handle worst case scenarios. The 2008 financial crisis is an excellent example. The Times today had an article on why the Mississippi health care system is melting down. A good part is that they refused Medicaid from the feds, which reduced the money the hospitals catering to the poorest got, so a lot closed and a lot more can’t pay doctors and nurses competitive wages. So, when Covid hit, disaster.

I don’t think most of us are that good at predicting disaster, but I do agree with the position that making your government as impoverished as you can make it is a recipe for disaster.

@bump

I mean, for the middle/upper-middle class whites, the “freedom” to choose on health insurance comes more back to whether or not they get to choose a high deductible or Cadillac plan, and the costs/benefits that come with it. They are not interested in what they feel would be a pay more, get less plan with UHC, especially if it means that their money is effectively paying for poor, ethnic, rural, urban, etc… people’s health care.

But for the working class folks? They stand to benefit from most of these ideas, but they’ve been convinced that the government wants to take their money, and throw it toward lazy and worthless people (which is code for “black and hispanic”), making their own lives harder, and not materially improving the lazy people’s lives either.

Mystification, “an obscuring especially of capitalist or social dynamics (as by making them equivalent to natural laws) that is seen in Marxist thought as an impediment to critical consciousness”

For example:

It is thought normal that one should struggle when they are young. It is OK to not pay kids, especially teens, a living wage. It’s saying it’s fine to saddle 18 year-olds with 5 figures of student debt, while also saying it’s OK to pay those same 18yo’s $2.09 + tips at Buffalo Wild Wings.

“Hey, I was broke after I went to college and had student debt and I turned out OK - why should anyone be any different? That’s just the way of things. You struggle, then you succeed because of your struggles.”

By this and many other arguments (you can come up with them yourself if you’re an American) you get a group of people who literally believe that the system should be punitive, it should make people struggle.

And that’s our current retirement and health insurance systems: they are designed to pick and choose winners and losers based upon ones acumen in using the products listed in the OP. Hence this thread.

@Kimera757

I’m not sure which wealth building products you are talking about - investments? Student loans? Mortgages? I’ll just not comment on that.

So, I was in the financial services industry for a few years, and the items listed were things we were supposed to sell - Life insurance, investment advice, 401(k) roll-overs, IRA’s and Roth IRA’s, etc. My apologies, I should have made it clearer that this sentence was referring to the list above it.

And, yes, we were trained to think of these as wealth-building products and services. Even your 10 year term policy.

@StGermain

I will say, just because there’s a GoFundMe set up doesn’t mean they were without resources. It seems like these days GFM is the modern equivalent to a sympathy card.

Good point. Should I just go ahead and setup mine in advance?

@octopus

So, analysis of human behavior that assumes rational behavior is I think flawed. I’m not a huge fan of pure democracy or pure capitalism or hardcore libertarianism for that reason. That said, history has demonstrated that concentrations of power in the hands of certain institutions leads to genocide so a paternalistic approach isn’t a panacea either.

Even when we have the state or companies fund pensions you can’t trust the bastards who run or oversee them. How do you set up a system that eliminates fraud when that system can be captured by people who are immoral? And that always happens. Without fail there is institutional or regulatory hijack or capture.

You almost have to have cultural indoctrination where certain values are damn near universal in order to have the internal checks. But we live in a society where even the concept of a shared sense of morality is deliberately undermined.

If I were dictator I would do a birth dividend. I’d also implement a few years of hard core national service with zero exemptions. Some form of national health care with penalties for unhealthy behavior. You want the benefits of an advanced economy? Well you need to help produce. I’d also get rid of the minimum wage

So in other words, I don’t think we can rely on laissez faire economics. But I’m extremely concerned about concentrations of power.

Thank you for your reasoned response, and I can agree with much of it. Not too sure what is meant by birth dividend, however.

@Martin_Hyde

I kind of have to reject your entire post here–I see no evidence it is based on anything aside from anecdote. And even that anecdote is weak, some people may seek to raise supplementary funds related to an unexpected death through a GoFundMe even if the deceased had a 401k or life insurance plan.

Yeah, I think I addressed this in my later post, where I showed that pretty much nobody participates in these products/plans in the manner in which we should. Americans as a whole don’t fund our 401(k)'s enough, we don’t have life insurance, we don’t think about how to annuitize our money, etc.

@F.U.Shakespeare

The financial services industry causes many Americans to have less success in long-term investing. Actively-managed mutual funds and professional wealth managers siphon off a bigger share of growth than most clients realize. The low-information consumers mentioned in the OP are the targets of glitzy ads and delberately confusing documentation. (There are of course exceptions, e.g., Vanguard).

A possible reason this would disproportionately impact conservatives (not that I’m convinced from the data presented that it actually does) could be a tendency to reject criticism of the financial sector as anti-capitalist.

When Michael Lewis’s Liar’s Poker came out in 1989, I had numerous conversations with conservative friends who dismissed out of hand the book’s claims that the nation’s finances were in the hands of such irresponsible frat boys. Spy magazine quoted the late Republican National Committee chairman Lee Atwater as declaring that he knew from reading the first page that it was a worthless book.

Thirty years later–and after a near meltdown of the economy due to those frat boys’ doings–it’s no longer a fringe view that the financial industry is willing to screw regular, hard-working Americans to make a buck.

People committed to their position by ideology may have been hit harder than the average person.

I have an edition of Liars Poker with a foreward by Lewis saying he was disappointed that too many young people took the wrong message from the book - they read it as a fun romp through Wall Street not a criticism of the system, and they used the book as inspiration to have similar careers.

@Max_S

John , what about all those people whose careers (and pensions/401Ks) went to shit in 2008?

Don’t you think that explains some of it? The people I talk to, mind you they are mostly conservatives past mid-life, constantly rail about how the recession screwed up their finances. Permanently.

I’m sure if you went back to 1940, before the war mind you, plenty of Americans would tell you how the crash of '29 screwed up their finances. Permanently.

Oh, no, I completely understand. Stock market returns are really more about timing than many understand, or even want to believe. There is a common mantra out there… you see this on LinkedIn and other low information social media platforms ( )… about how you can never lose money long term in the stock market.

Well…

The above chart is the DJIA adjusted for inflation, the chart on a log scale. My grandparents, lucky them, literally started buying stocks at the bottom of 1931 (they were married in April that year) and passed away at the height of the internet bubble, fully believing in the American dream. Why not - as you can see from the two red comments on the timeline, it worked.

But… to your point… look at the person who started investing in 1935 and died in 1980. They pretty much lost all their gains earned from 1955-1975 and other than reinvested dividends, the American system just failed them. All because they started 4 years later than my grandparents and died 20 years earlier.

@octopus

A recession only screws up your finances if you actually sell. That’s an easy concept to know but it’s an extraordinarily hard concept to follow. I hate to toot my own horn but Spring 2020 is a prime example because when others were panic selling I was buying and I was recommending to everyone I could to either buy or sit tight. Hell, I was one of the few on these forums saying it was unwise to lock in a loss. However, it’s hard for people to behave where a paper loss is not a real loss. They panic and want to “preserve” their money. They should know better but many folks can’t force themselves to do what they know what is right which is to buy. There was no loss in 2008 until the assets were sold in which case the loss was now real. This is not knowledge based decision making for most people who invest this is behavioral.

See above re: timing. Sometimes, the recession sells you!

… will return later, have stuff to do.