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What will COVID-19 do to Social Security?

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The pandemic will not be as devastating for Social Security’s long-term solvency as originally assumed.

That’s the hopeful conclusion I draw from an updated analysis released in late November by the Social Security Administration’s chief actuary, Stephen Goss. Before the pandemic, as you may recall, Goss was predicting that the Social Security Trust Fund would run out of money in 2035. After taking into account the myriad ways in which the pandemic is likely to impact Social Security in coming years, he is projecting that this run-out-of-money date is a year earlier, in 2034.

Read: Today’s older workers may see the first cuts to Social Security benefits

That’s further in the future than some of the more dire scenarios that some painted early in the pandemic. But is Social Security looking at the future through rose-colored glasses? In this column I want to review the economic assumptions that Social Security’s actuaries made in reaching its relatively sanguine projection.

Goss’ report outlines 15 different economic and demographic assumptions that his office used in estimating the pandemic’s long-run impact. One of the most consequential is future growth of the U.S. economy. Goss’ office is assuming that, after plunging in 2020 far more than assumed a year ago, U.S. Gross Domestic Product will make up for much of this lost ground over the three years from 2021 through 2023.

By 2024 the U.S. economy is projected to be 1.9% lower than it would have been but for the pandemic, and thereafter grow at the same rate as assumed in the pre-pandemic analysis. That means this 1.9% smaller economy will persist indefinitely.

Read: So your investments did great this year, but what did they cost you?

For a reality check on this projection, I turned to the latest economic estimates from members of the Federal Reserve’s interest-rate-setting group—the Federal Open Market Committee (FOMC). As of mid-December, the median of FOMC members’ projections was for a smaller drop in 2020 than what is assumed by Social Security’s actuaries, and then for smaller gains in subsequent years. The net effect of these differences is plotted in the accompanying chart. By the end of 2023, FOMC members are projecting that U.S. Gross Domestic Product will be only slightly smaller than assumed by Social Security’s actuaries—just 0.3% smaller.

Given that economic projections are hardly an exact science, these FOMC projections provide broad reinforcement to those made by Social Security’s actuaries. And that in turns means you can derive at least some solace that, in contrast to some of the Chicken Little projections made several months ago, the pandemic is not going to cause Social Security to run out of money in the next several years.

Even if you don’t share this confidence, the accompanying chart provides a benchmark with which to make your own back-of-the-envelope projections about Social Security’s long-term solvency. If the economy turns out to be worse than projected, you would worry more—and vice versa.

Implications for retirement planning

Social Security running out of money is scary, of course, regardless of whether it happens in 2034 or 2035. But the pandemic hasn’t changed this reality. For several years now, retirees and near-retirees have had to squarely face the prospect that, unless Congress acts, Social Security at some point in the mid-2030s will not be able to pay 100% of the benefits that it is otherwise obligated to pay. Assuming you had already taken that possibility into account in devising your retirement financial plan, you shouldn’t have to change it because of the pandemic.

Social Security’s updated projections should instead refocus our attention on the longstanding structural challenges that Social Security faces. And, since addressing those challenges becomes increasingly difficult the longer it’s put off, let’s all urge our elected representatives to tackle it in 2021.

Let’s hope that this is one New Year’s resolution that they will actually keep!

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.



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No, you’re not crazy. Yes, CDC mask guidelines are confusing — should you stop wearing a mask in public or not?

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Wear a mask. Don’t wear a mask. Make one. Buy one. Wear it outdoors. Wear it indoors.

Confused? You’re not alone.

So what’s the deal with the CDC’s new guidance? “Anyone who is fully vaccinated can participate in indoor and outdoor activities, large or small, without wearing a mask or physical distancing,” Dr. Rochelle Walensky, the director of the U.S. Centers for Disease Control and Prevention, said on Thursday. “If you are fully vaccinated, you can start doing the things that you had stopped doing because of the pandemic.”

Vaccines have helped to slow the spread of the coronavirus, and this appears to be a natural next step for Americans tired of masking up. “We have all longed for this moment when we can get back to some sense of normalcy,” Walensky said.

We are still far, far away from normal. You can take off your mask “except where required by federal, state, local, tribal, or territorial laws, rules and regulations, including local business and workplace guidance,” the CDC says. You still need a mask on buses and trains, in museums and most stores, possibly at your place of work, but not inside restaurants, except when you’re going to the rest room.

How do you know a maskless person is vaccinated? It’s an honors system. The CDC guidance gives less reason for people to abide by that old American Express slogan: “Don’t leave home without it.” People are leaving home without their masks, even in states that still require everyone — vaccinated or not — to wear them in outdoor public spaces, including on the streets of New York.

Many people are fed up, it seems. Little wonder: The CDC’s announcement took many health professionals by surprise: According to a New York Times survey, 29% of epidemiologists surveyed thought people would be wearing masks in public spaces for at least aanother year, while 26% said they believed people would do so for another year, and 26% said they thought mask wearing would continue in some form from now on.


‘You still need a mask on buses and trains, in museums and most stores, possibly at your place of work, but not inside restaurants, except when you’re going to the rest room.’

The change in CDC mask guidelines comes just over a year since the CDC said everyone should wear masks. In April 2020, the Trump administration and the CDC reversed their policies on face masks, and said all Americans should wear cloth face coverings and not — as officials previously said — just medical workers. Trump cited “recent studies,” while the CDC cited “new evidence.”

Fast-forward to Thursday. “I think it’s a great milestone, a great day. It’s been made possible by the extraordinary success we’ve had in vaccinating so many Americans so quickly,” a maskless President Joe Biden declared in the White House Rose Garden declared, citing the vaccines from Johnson & Johnson
JNJ,
+0.15%

Pfizer-BioNTech
PFE,
-0.20%

and Moderna
MRNA,
+7.68%
.

“It’s going to take a little more time for everyone who wants to get vaccinated to get their shots. So all of us, let’s be patient with one another,” the president said.

Forgive the public for having mask rules fatigue. We’ve been on quite a journey. Studies earlier in the pandemic suggested that adopting the practice of mask wearing, one that was already accepted in many Asian cultures, would have saved tens of thousands of lives. Many Americans were understandably frustrated, but also eager to do anything they could to stop the virus.

‘So what’s the deal with the CDC’s new guidance?’


MarketWatch illustration

Flashback: Dr. Nancy Messonnier, director of the Center for the National Center for Immunization and Respiratory Diseases, said in a briefing on Jan. 30 last year, “The virus is not spreading in the general community. We don’t routinely recommend the use of face masks by the public to prevent respiratory illness. And we certainly are not recommending that at this time for this new virus.”

Three months later, New York Gov. Andrew Cuomo, a Democrat, ordered all New Yorkers to cover their faces in public when they can’t maintain a proper social distance. “You’re walking down the street alone? Great! You’re now at an intersection and there are people at the intersection, and you’re going to be in proximity to other people? Put the mask on.”


‘These are just guidelines from the CDC. It’s up to the states to decide what to do next. New Jersey and New York still maintain their mask guidelines in public spaces.’

The CDC’s latest mask announcement are just guidelines. It’s up to the states to decide what to do next. And that’s a whole other story. New Jersey and New York still maintain their mask guidelines when in public spaces. Gov. Phil Murphy, a Democrat, is examining the guidelines, a spokeswoman for his office said in a statement. Murphy, like many governors, wears a mask in his Twitter profile. Perhaps that tells us all we need to know.

Roughly half of U.S. states have some mask mandate. Alabama, Louisiana, South Carolina, Florida, Mississippi, Nebraska, and Texas, among others, had already removed their statewide mask mandates in public spaces and/or had not instituted one. Florida Gov. Ron DeSantis, a Republican, said Thursday he would grant clemency to gym owners who broke the mask mandate.

Texas Gov. Greg Abbott, a Republican, officially ended his state’s face-mask mandate in March, and allowed businesses to reopen, despite opposition from rival lawmakers and health professionals at the time. Gilberto Hinojosa, chairman of the Texas Democratic Party, described the move as “extraordinarily dangerous” and said it “will kill Texans.”

Cuomo, meanwhile, perhaps still reeling from this time last year when New York was the epicenter of the pandemic in the U.S., was definitive in maintaining current policy. Keep your masks on. “In New York, we have always relied on the facts and the science to guide us throughout the worst of this pandemic and in our successful reopening,” he said in a statement.


‘People take off their masks to make phone calls on the street in states where there is a mandate to wear them in public places, and they take them off while they are sitting outdoors eating.’

Vermont Gov. Phil Scott, a Republican, said his state will follow the CDC guidelines. “Later today, we’ll be updating Vermont’s mask mandate following the CDC’s updated guidance, announced yesterday,” he tweeted Friday. “This will mean those who are fully vaccinated no longer need to wear masks — indoors or outdoors — nor do they need to be concerned with physical distancing.”

In Nevada, Gov. Steve Sisolak, a Democrat, said the state updated its own policies on mask wearing to follow the CDC’s guidelines with immediate effect. Nevada Health Response added: “COVID-19 is still very much a threat in our State and many Nevadans may choose to continue using masks based on their and their families’ personal health concerns. Others should respect this choice.”

That statement, perhaps more than any other, illustrates the tension, fear and frustration not only with state laws and changing guidance, but with each other. People take off their masks to make phone calls on the street in states where there is a mandate to wear them in public places, and they take them off while they are sitting outdoors eating. Most people are doing the best they can.

In California, Gov. Gavin Newsom, a Democrat, said people should still wear masks in public spaces for now, but likely not after June 15 when the state fully reopens. “Only in those massively large settings where people around the world, not just around the country, are convening and where people are mixing in real dense spaces,” Newsom told KTTV.

“Otherwise we’ll make guidance, recommendations, but no mandates and no restrictions in businesses large and small.” Is that all crystal clear? I’ll leave that for you to decide.





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My friends raised $15,000 on GoFundMe while I was comatose after an accident. But I inherited $1 million, and my insurance covered the costs

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Dear Quentin,

Last month, I was in a terrible accident. Most of the expenses are covered by insurance and a couple months before that, I received almost $1 million from a relative. I had not told anyone about my good fortune nor made any purchases (yet!) that would indicate a change of status. While I was in the ICU and comatose, a friend started a GoFundMe for me.

By the time I found out about it, it was up to $15,000 and over 300 friends, even strangers, had contributed. Several friends gave hundreds of dollars. I asked several more knowledgeable friends about somehow canceling it, and they discouraged that action. Too late! Now not only am I racked with guilt, but I am afraid to make improvements on my house.

I make donations to every GoFundMe that I come across, and I made donations to my favorite causes, but meanwhile there is THAT money. I did one “status update” on Facebook, thanking everyone and mentioning my ego “accepting” help. I am afraid to even look at the total, and have not gone to the site. To make it worse, before this, I was lower-middle-class, and so are many of the friends who gave money.

I am sick at the thought of their sacrifice. I will buy them lunch and drinks when I am on my feet, but what else can I do? I can’t even enjoy the money I received before the accident for fear of upsetting someone.

Ask Before Funding Me

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Funding,

You are still recovering from your accident, and no doubt traumatized by that ordeal. The last thing you need is this hanging over your head. It may have become a proxy for all of the emotional turmoil you endured during and after your accident.

That said, I suggest you rip off the Band-Aid and take action. Tell your friends that you appreciate what they did for you, but your insurance covered most of the costs, and you have an inheritance and more money than you need to get through this.

GoFundMe can also return the money to your friends. You can post another status update to say the gesture meant more than any monetary value, but the insurance has come through, and you have been very fortunate. GoFundMe makes it easy to refund donors.

And, yes, I take your point. Setting up a GoFundMe without the knowledge or permission of a friend or neighbor or coworker is a risky prospect, and should be avoided in most, if not all, instances. In this case, you were in the ICU and sedated, so they can be forgiven for that.

Godspeed with the rest of your recovery.

The Moneyist: My friend set up a GoFundMe to pay for her sick pet, instead of getting a refund on our vacation. I canceled the trip. Who’s right?

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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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My friend of 30 years owes me $20,000 after living in my apartment rent-free. She texted on my birthday to say she misses our friendship

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Dear Quentin,

One of my oldest friends of 30 years rented an apartment from me for 8 years. She stopped paying rent during the last year when she started her own business. She kept saying she would pay me back, but by the time she moved out 3 years ago, she owed me more $20,000 in back rent and stopped taking my calls when I tried to collect it.

Out of the blue she texted me on my birthday last week, and said she missed me, and would like to be friends again. However, her texts mentioned nothing about paying me back. I have already made peace with the lost money, and lost friendship, but I’ll bring up the back rent if we do speak again, which will probably be the end of that.

So what should I do? What should I say?

Bad Blood

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Bad Blood,

“…and I miss my $20,000.”

If your friendship is that important to your friend, she should have led with her amends. The price of that is $20,000. The most interesting, if not surprising, thing about her text message is that it focused on how she feels, and her needs. It does not address the harm she has done to your friendship — possibly irrevocably.

U.S. states have a dollar limit on small-claims court cases. Unless you live in Delaware, Texas or Tennessee, it seems that your dispute with this friend exceeds that amount in other states. But that also speaks to the amount of money she pocketed. It’s a lot of money, and it should not be brushed off so lightly. Think again about taking legal action.

Enough texting. Meet her face to face. Tell her that you had to pay the mortgage while she lived there rent-free, and remind her that she is not the only person with financial responsibilities, and that she abdicated her duty to you as a tenant and as a friend to pursue her needs. She used your friendship as leverage to scam free rent.

She cannot repair the friendship until she has repaid the debt.

The Moneyist: My boyfriend talked me into depositing my paychecks into his bank account, and paying for a car in his name. What can I do?

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.





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