Like other Hivers, I have multiple accounts. Some are for special topics or a small degree of privacy. One in particular is just for HBD Savings. I have never posted or commented from that account. It has just enough Hive Power to be useful as a bank account. That is the account I have made for my HBD Pension.
For the moment, HBD Savings offers 15% interest on HBD deposits. It was 20% interest at one point. Perhaps someday it will be less than 15%. But for the moment it is roughly double the unofficial USD inflation rate of 7%. The official USD rate of inflation is typically lower than the real rate as the US Government has an incentive to keep it low to avoid giving retirees larger cost of living adjustments every year.
By crypto degenerate terms, 15% annual return is laughably bad. After all, you can achieve a 40% or greater average return by simply holding Bitcoin for a few years. Of course, that being the average, there will be some years in which Bitcoin has negative returns that offset the big pumps. This makes Bitcoin problematic when you plan to draw down every month. On some good months you would have to liquidate less BTC to pay for expenses. In some bad months you'd have to sell more BTC to pay for those same expenses.
My thinking is to have my HBD Pension account as a buffer. I'll discuss what that means later. For the moment, I am growing the HBD Pension account up to a base level that will pay 100 HBD per month, which is a significant amount for me to save. In case you're curious, 8000 HBD will yield 100 HBD in interest monthly at 15% interest. It may very well take a few years to get there with my small deposits and compounded interest. I have about 12 years to go before I can retire. I have time.
Now let's discuss the HBD buffer part.
If I put the majority of my savings into Bitcoin with the average annual growth of 40%, then when I reach retirement age, I can start liquidating a percentage of my BTC into HBD. This can be 1% of my sats every month. I can't go into actual numbers on this post because I don't know how many sats I'll have. And when the day for retirement comes that number will change from month to month as I contribute my social security payments back into Bitcoin.
The plan is to convert my monthly government pension, Social Security, into Bitcoin to add to my overall Bitcoin savings. From that I can draw the 1% of sats to send to HBD Savings. This would, in turn, grow my HBD Savings, and by extension grow my monthly HBD Pension payout from interest. Therefore, my monthly HBD income would increase every month.
It may be possible to save on taxes by having a Roth IRA with Bitcoin, but that would limit me to about $8000 in annual contributions from earned income, that is from working a part-time job. Retirees can continue to contribute to their Roth IRA in retirement, but only from earned income up to that $8000 annual limit. Any excess earned income would need to be in a taxable account.
There is the risk that Hive blows up or that the HBD Savings interest rate drops. But if more people are doing something similar, it means that Hive will have significant amounts of value locked up in HBD Savings, which means less circulating HIVE. And when the time comes that I leave this earth, then my accounts can be passed on to heirs. My heirs would be getting a monthly income if they don't liquidate the savings.
Over the long term, I think it is beneficial for Hive to have people deposit into HBD Savings as it takes HBD and Hive out of circulation and grows the market capitalizations. The added advantage to banking with Hive, after all we are using Hive as a bank, is that we can also continue to mine more Hive and HBD well into our retirements.
There is a risk that the interest rate will go down. However, I think it would be dangerous to lower the interest rate to zero or below 7%, which is about what the real inflation rate is. If there is no yield, there is no incentive to hold HBD. We all remember the days of 0% interest on HBD. Nobody saved it. If the Hive Witnesses wanted HIVE to dump, they would simply drop the interest rate below the rate of inflation. Then we'd all convert to HIVE and sell.
I'm going to go off topic. I think many users are of the mindset that Hive is a way to earn crypto that they can sell. Obviously, you can do that. But the greater utility is to bank your HIVE and HBD. Your Hive account is a bank account. If you keep selling off everything you earn, you're kind of missing the point of crypto. Crypto is a way to opt out of the traditional financial system. We have that here. Your Hive account is accumulated wealth built upon your brain power. You are converting your creativity into wealth. Yes, you do have living expenses. But it is vital to your long-term financial security to save a portion of what you earn on Hive in HBD Savings. Eventually, your interest earnings will be enough to cover a larger and larger portion of your expenses rather than your earnings from posting and curating. But that doesn't happen if you spend everything you earn.
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