Recently, I went through a situation that really got me thinking.
My grandmother lived an extremely frugal life, no excess, always saving every penny. Even later on, when she could have used her savings to make her life more comfortable, she refused to touch them. Her goal was clear: to leave a good inheritance for her children and grandchildren instead of spoiling herself.
Unfortunately, she faced health issues and ended up in the hospital. Eventually, it was decided she needed to move into a care home, costing around CHF 8’000/month, all taken directly from her savings until they’re basically gone.
Ironically, if she had allowed herself to enjoy her money a bit more earlier on, or made significant gifts or donation while she was still healthy, she could have improved her quality of life and once her money ran out, the state or insurance would have stepped in to cover the care costs. Even if she had no savings at all the state would have been there.
Of course, I understand the system can’t work if everyone just burns through their savings and expects the government to take over. But it’s still frustrating to know that you’ve saving all your life only to pay full price for the same care another person gets for free because they spent everything…
How do you find the right balance between saving for the future, enjoying your life today, and protecting your capital for yourself or your descendance? Aren’t you afraid a similar situation could happen to you and how would you manage to optimize your savings?
The reality is that for most people the life time savings end up being zero sum game (they save all their life to be able to fund retirement). Very few are able to leave significant and sizeable inheritance to their descendants.
The only thing that we always need to remember is that any time lost can never be regained. So spending money on things that give true happiness is very important. Not saying one should end up in Las Vegas for a three month spending spree but it’s really important to remember what are you saving for. Or else it would be a number on balance sheet and nothing else
You could be a saver but we should always put health as a priority by spending time to workout, buy high quality food/organi, buying long duration/high quality appliance to avoid chemicals.
Spending good time with family and friends on experiences will also improve your lifespan.
You could spend it all before ending into a care home but make sure to not keep any real estate as canton could bill you the amount spent during your last years. It should be deduct from your wealth at the inheritance procedure.
Yea, I get you. I bought business class and a couple of 5 star hotels for main vacation this year.
But saying that, I will continue to save significantly in order to retire early. Buying myself years of work is the best thing to buy in my eyes. I’d rather live on less but not work, than live on more but work. Once the retirement happens, I can re-evaluate how much I then want to spend to use that time. But at the end of the day, we are privileged enough to if we have to, once 2. Säule kicks in and AHV (if you did early retirement), we can always bugger off to a cheap country and still live a nice life, so for me I don’t intend to keep saving then. The saving now as I said is primarily to get to RE.
In terms of health, my grandfather lived old and well enough, in a home but without much help needed (more like a retirement home than a care home). My dad is even fitter and I would say me too, I eat very well and do a lot of cardio. I do not worry about this. It’s a risk, sure, but everything in life has risk.
Very few people pass on significant amounts of wealth. If you are concerned about that, you can liquidate assets at some point and gift it. That is possible without tax here in most instances.
If all goes well, and on average, people inherit in their 60s. Usually that’s well past the time they actually need it.
I don’t see the point in leaving an inheritance, much better to spend earlier to improve the quality of life of your kids when they’re young (and yours as well), even if that means that overall you will have less total lifetime wealth.
On that topic, right now I’m reading “Die With Zero” which was recommended to me by someone at a Zurich FIRE meetup.
It advocates not saving money when you’re in your 20s and still relatively poor, as spending it on experiences is worth much more. And giving wealth to your family etc. when they’re 40 or so is going to benefit them much more (buying a house etc.) than when they’re 60 or 70 and are pretty much set anyway.
Do you recommend? I had a look at a summary + reviews but got the impression that it can be summed in: “be rich, don’t be poor”.
Yes, IMO it is a very important read and your impression is not what the book is about.
That one is also on my reading list… I’ve just finished “How Will You Measure Your Life?” (2012) Clayton Christensen that is probably very close to those ideas.
Edit: Clayton Christensen died quite young at 67.
Only halfway through so far. A bit long-winded, but the message is worth considering IMO.
I had another look at reviews and summaries and will pass, don’t think it’s worth my time.
I will add that it also makes more sense to invest in education/personal/professional growth in your 20s. The ROI will be much higher.
I suppose the inheritance will benefit the grandchildren in this case
Not if they have to wait till 60 themselves. 
well, grandgrandchildren then if you plan to live till 120
That’s true, let’s see the cascade effect:
- Have kids at eg 30 → you are 70 when they’re 40, and maybe your grandkids are 10
- you buy your kids property with all your compounded savings, or at the very least put down the deposit so their entry fee is much lower and they only need to cover the mortgage
- this removes the burden from your kids to buy a house, so they can (maybe) live better/invest more/do more for their kids
- their kids (your grandkids) get an even better deal in life having secured roofs over their heads from day 1, now there’s a fork:
- the grand-grandkids start an exponential growth of owning land, where in 20 generations they’ll own all the known universe.
- the grand-grandkids have such an easy start in life that they never push or challenge themselves to do anything meaningful, and squander it all
The reality:
- none of this is in a vacuum, 40, even 25, hell even 15 years ago job security was fairly rock solid in most of the west with some exceptions in very high-paying jobs
- people could afford a deposit on 1-2 middle class jobs, and felt confident they’ll be able to pay off the mortgage unless they did something majorly stupid at work
- people get scalped putting down a deposit, and live by the skin of their teeth in stress of losing their jobs, and their property
- parents’ properties gain in value (but also deteriorate, and parents with cut/meagre pensions and no savings/investments may not afford to maintain them to the standard they’d want to, but still, owning the roof over one’s head is still critically important)
- compounding only works as long as not touched, but in the real world it needs to be touched to buy said house and experiences
- back to square one and you die, effectively, with zero +/- some experiences that’ll die with you, +/- some legacy which will also be forgotten very soon.
Or, as we say in Greece: “the first generation builds, the second generation keeps, the third generation burns”, but by that point you’re long gone and have no care.
Also, scarily accurate, down to the clothes: Redirecting...
So, I don’t disagree with the concepts of a book I haven’t read, but feel fairly confident I can get the gist of, just saying it doesn’t sound like rocket science.
I already imagine how in 2050 people will say: “They had it easy in 2025, there were jobs for humans!”.
Like Otto Bismarck said: The first generation creates wealth, the second manages wealth, the third studies art history, and the fourth degenerates. Source
Don’t laugh…I’m genuinely worrying about my kids.
My dad, the prototype for “die with zero”, someone who’s lived luxuriously all his life, full of experiences and thankfully still in very good health, has no savings but owns 2 properties, someone who’s always said “I don’t want to make a rich corpse”/“burial shrouds have no pockets” told me ~30 years ago “in my time you had a great job if you knew to write your name, and you had a good job if you didn’t, in your time it’ll be harder”. He started working in 1975 and stopped around 2010.
Never save on health, be it physical or mental. The later can be in the thousands.
I find a good approach is that if you are going to sacrifice now for future gains, it is important to have a clear goal so that you can create your plan accordingly.
For example, if you plan to FIRE by X age, then that would be a clear goal and you can plan accordingly. If you want to leave your offspring an inheritance, then that would be the goal and you would have to plan accordingly so that the money actually makes it to its intended recipients.
Of course, if you both enjoy your work and enjoy a frugal lifestyle, then you could just save for the heck of it and leave your accumulated capital to charity, etc. But otherwise it takes a clear goal and careful planning.