The Coronavirus and Economic Insecurity

According to the latest CDC report, the new infections occurring in China due to the COVID9 virus are down, even as the virus spreads to other parts of the world including the United States.  With 6 deaths being reported in the US at the time of this writing, death rates are nil compared to death rates for the flu, with the CDC reporting 61,000 deaths due to the flu since 2010.

Yet, something besides the COVID9 that is also pandemic, but not getting much attention, is economic insecurity.  According to the Gerontology Institute at the University of Massachusetts Boston, more than 4 out of 10 Americans ages 65 and older are not able to pay for their basis needs.[i]   Imagine if more than 40% of those who get infected with the COVID9 virus died.  That would be devastating indeed.

Yet more than 40% of those 65 and older don’t have enough money to meet their basic needs.  And there is no improvement seen on the horizon to rectify this pandemic.

Meanwhile, Forbes reports that you shouldn’t worry about this economic pandemic as not everyone needs to spend as much in retirement.  Half of the population will spend more and half will spend less, says Forbes. The problem with this outlook is, how much will YOU need to spend in YOUR retirement?

The answer to that question is obviously unknown to anybody. That is why typical financial planning has failed so many people.  Typical financial planning is all about reaching the magical number of how much you will need before you can retire.  But what if:

  • You need more medical care than you expect?
  • The cost of living increases by more than the average 2.8% inflation rate?
  • You need assisted living for more years than you planned?
  • An adult child and/or your grandchildren needs financial assistance after you’ve retired?
  • Etc.

These are the realities that are plaguing millions of Americans that are 65 and older.  These kinds of dilemmas strike fast and hard without forewarning and when they do, they devastate so many who had thought they were “set for life” financially.

The truth is, typical financial planning does very poorly when it comes to building a sustainable financial future for those who are planning for retirement.  On the other hand, traditional planning focuses on accumulating assets that provide guaranteed growth for your entire lifetime, living benefits throughout your entire lifetime, and a death benefit for those that you leave behind after your retirement.  Traditionally, such planning sustained those who reached age 65 well into their future.  But these assets fell out of grace with typical financial planning during the 1980’s when interest rates rose to unbelievable heights and the stock market went on a bull run that lasted up until 2001.

But those days are over for now.  The stock market has only averaged a 4.249% nominal rate of return between December 1999 and January 2020,[ii] and interest rates have been in the doldrums.   No wonder those age 65 and older are being hit so hard by this economic pandemic. When you consider the cost of inflation over these past 20 years, an actual return on investments only comes out to be 2.072%. This is lower than the 2.8% averaged annual CPI over the last twenty years.

Running out of money to meet your living expenses is not a pleasant thing to look forward to.  But you can do something today that will help you avoid this pandemic.  Schedule an appointment, and start using the Life Benefits Formula.  This formula will help you plan for the future while providing you the peace of mind you need to live both today and in the future.

Dr. Tomas McFieDr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.