Cares Act- How will this effect the economy down the road?

[exstasie]

Many of you I think aren't understanding the point of this thread.  It is not about deciding whether people who are enduring hardships due to Covid-19 should be eligible for this money or not, or whether they truly need it or not...it's about the long term implications of what this could/will do to the economy.  Being on the front line of this, I know for a fact that many people are abusing this Act, and using the money in a way that is not in their best interest.  I also know that many are using in their best interest.

The point of this thread is how this will effect the economy down the road when countless people have blown through their retirement during Covid and will need government assistance or some sort of help down the road.  This will effect how their plans play out down the road, maybe increase subsidized housing, the need for food banks etc etc.  These are the implications and long term issues I was trying to discuss.

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

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[ChiBitCTy]

Many of you I think aren't understanding the point of this thread.  It is not about deciding whether people who are enduring hardships due to Covid-19 should be eligible for this money or not, or whether they truly need it or not...it's about the long term implications of what this could/will do to the economy.  Being on the front line of this, I know for a fact that many people are abusing this Act, and using the money in a way that is not in their best interest.  I also know that many are using in their best interest.

The point of this thread is how this will effect the economy down the road when countless people have blown through their retirement during Covid and will need government assistance or some sort of help down the road.  This will effect how their plans play out down the road, maybe increase subsidized housing, the need for food banks etc etc.  These are the implications and long term issues I was trying to discuss.

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

I couldn't agree more.  This is what I see and deal with on a daily basis.  People are so often living above their means have no sense of what financial savings are all about.  It's often like they are allergic to good advice.  With so many people living so close to "hand-to-mouth" like you stated, I fear this Cares Act is going to push so much over the edge, so to speak and end up blowing up in our faces ( americas economic face that is ).  Scary how unintelligent and lazy people are.  Blows my mind time after time though it shouldn't

[sana54210]

Saving is not going to save you if you ever have anything that happens to you and you have to cash it out.
There are people who get sick and spend all their retirement money and end up working until very old age.

Governmental ones are perfect for that, almost all big nations have free healthcare as well, places like USA for example do not have it for some reason I do not know about but in the end other nations do have governmental old age income, you pay a certain tax until you retire with each paycheck and when you retire the government pays you a salary basically for paying them all that tax. At the end of the day I would say having a forced governmental retirement fund would allow you to just spend your old age with ease without every worrying about money or health.

[ChiBitCTy]

Saving is not going to save you if you ever have anything that happens to you and you have to cash it out.
There are people who get sick and spend all their retirement money and end up working until very old age.

Governmental ones are perfect for that, almost all big nations have free healthcare as well, places like USA for example do not have it for some reason I do not know about but in the end other nations do have governmental old age income, you pay a certain tax until you retire with each paycheck and when you retire the government pays you a salary basically for paying them all that tax. At the end of the day I would say having a forced governmental retirement fund would allow you to just spend your old age with ease without every worrying about money or health.

Well that's simply not true.  First off it all depends on how much you have saved and what happens to you.  This is what we have insurance for as well.  It is true that the US has a shitty healthcare setup, and do not have free healthcare like most advanced nations, but many still have insurance and some good insurance, so it all depends on the individuals situation.  But to say savings wont help, just isn't true.

The US also has social security, which is an "old age income", btw.

[SquallLeonhart]

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

It is not 100% a financial situation that makes them go into their retirement funds, don't get me wrong I hate the financial system we currently have as much as the next guy, working for peanuts to make someone else rich, having someone so rich that poorest 100 nations combined do not worth that much, all of these are horrible and I agree that people go into their savings because of covid is a reality as well.

However, one thing I would like to point out is that even when you do not need money at all, there are tons of people who still go into their retirement fund whenever they can because they want to spend the money right now instead of waiting to be older, it could be better investment according to them, it could be for their business or it could be as simple as getting a new car because people are not really smart with their money.

[disconnectme]

It is still early to jump into conclusion what would happen in the near future, if I have money locked somewhere and I am passing through difficulties and would love to have the money to help me out since it is my money, the issue is this, are they using it for productive means, if not then it could be a serious issue in the future especially those close to their retirement age.

[exstasie]

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

It is not 100% a financial situation that makes them go into their retirement funds, don't get me wrong I hate the financial system we currently have as much as the next guy, working for peanuts to make someone else rich, having someone so rich that poorest 100 nations combined do not worth that much, all of these are horrible and I agree that people go into their savings because of covid is a reality as well.

However, one thing I would like to point out is that even when you do not need money at all, there are tons of people who still go into their retirement fund whenever they can because they want to spend the money right now instead of waiting to be older, it could be better investment according to them, it could be for their business or it could be as simple as getting a new car because people are not really smart with their money.

I get it. It's hard for people to think in terms of retirement, especially when it could be several decades out. If you think about it, a lot of people probably think of this as "free money" too. Their accounts are employer matched and have grown with the market's gains over the past decade. The only thing stopping them from emptying their accounts before was 1) not having their employer match fully vested (this can take several years) and 2) the tax penalty on early withdrawals. Now that the tax penalty has been removed (and people also have a legitimate fear of short term financial difficulties on the horizon) it's not a big surprise that people are digging into their retirement funds.

Like I was saying before, this phenomenon is completely tied together with our culture of consumerism, which was already driving our economy off a cliff because of the inevitable drive towards debt deflation and subsequent bubble pop. https://en.wikipedia.org/wiki/Debt_deflation

A breakdown of the retirement savings system will just accelerate things.