Monday, June 11

Thrifty till 50, then spend to the end…

I’m doing my best but, given human nature, it goes against the grain. Writing in the New Guardian, IFS’s Paul Johnson informs us that many of the assets people retire with are still with them 30 years later. Retirees live on their pensions — state and private — but neither use much of their savings nor unlock their housing equity. “We put all that effort into accumulating assets and then fail to spend them.” And this, of course, has a detrimental effect on the economy. While Johnson sees this in part as an aberration – in the future, with no private pension income to live on, people will have to treat their other assets differently – he believes we will continue to forgo our Lamborghini in favour of security, our peace of mind. Being the cynic I am, Gudgeon is confident the government has large departments beavering away on the development of new taxes to solve the problem.

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