"I imagine a man must have a good deal of vanity who believes that all the doctrines he holds are true, and all he rejects are false." -- Benjamin Franklin

Sunday, August 30, 2020

The Health and Wealth Gap

     Retirees are not worried about money. We are worried about contracting Covid. Our children are not worried about Covid. They are worried about money.

     So Covid presents a health gap between young and old, as well as a wealth gap between young and old. That's an undeniable conclusion from an Edward Jones and Age Wave multi-generational study of some 9,000 Americans.

     It makes sense when you realize that Covid-19 has in six months killed over three times the number of Americans who died in all the years of the Vietnam War. Today Covid is the third leading cause of death, behind heart disease and cancer, but ahead of Alzheimer's, accidents and any kind of criminal activity including gun violence.

     Most of the people who get Covid are under 40. But most of the people who die from Covid are over 60. A quarter of people over age 60 who come down with Covid end up in the hospital. But only 3% of those under 40 spend any time in the hospital. And they usually get better. It's extremely rare for someone under age 40 to die of Covid.

     But if retirees have to worry about Covid, we are not by and large worried about our income. We're not losing a job or suffering a cutback in pay. Our incomes are secure, from Social Security, pensions, IRAs and other non-earned income. Plus, three-quarters of retirees own their own homes, half of us owning outright with no more mortgage. So only about 10% of retirees report that Covid has "negatively impacted" their financial security.

     For our children it's a different story. They have lost over 20 million jobs. Some of those jobs have come back in the last two months. But further layoffs linger. And nobody knows how many are still working but are taking home half a salary, or even less.

     In our case, out of four children, two are still working at full salary. One was furloughed for three months on a fraction of his salary. He's now back at work, hoping for the best. The fourth kept his full salary until June, then was cut back by 50%, and recently was cut another 15%. He still has a job, but there are no clients and there's not much to do . . . and he's fearing the worst.

     Our own experience reflects the broader picture. According to the survey, a third of Millennials say their finances have been impacted by the pandemic. Many of them have stopped making contributions to their retirement plan, and a significant number have dipped into their retirement account to pay current bills. Some adult children have even been forced to move back to their parents' home due to a job loss.

     The financial stress has also caused mental health issues. Over a third of young adults say they have suffered mental health declines since the pandemic began, compared to just 10% of their parents

     It's another story for younger Baby Boomers who are not yet retired, but suddenly find themselves out of work. Some Baby Boomers Are Pressured to Cut Spending since they're too young for Medicare or Social Security, but they may still have children to support or college tuition to pay -- and yet their prospects for finding a new job are slim to none due to ageism. Even 50-somethings who are up on the latest technologies are often passed over in favor of younger people with fewer skills.

     Meanwhile, almost half of retired Americans said the pandemic has made them worry more about their children. Some 24 million Americans say they have provided some financial support to their adult children during the last six months. Many of us have had no problem helping our kids. Our income has remained steady, but expenses have gone down, so we have more money sloshing around in our accounts -- money we can afford to give away.

     But others have to put off more necessary expenses in order to help their kids -- delaying home repairs, foregoing new clothes, stretching out credit-card payments. Yet the majority of retirees still say they would offer financial support to their kids even if it did jeopardize their own financial future.

     Many of us can afford to help our kids now, but we worry the economic impacts will linger, causing us to compromise our longer-term financial security. The majority of retirees see retirement not just as an end to work, but as a new chapter in our lives, when we can pursue new dreams, enjoy new freedoms, take on new challenges. Covid by itself puts a brake on pursuing new opportunities since it's hard to connect with a new group or a new cause when we can't meet people face-to-face. Any financial squeeze just further inhibits our pursuit of new opportunities.

     There is at least one silver lining to Covid. According to the survey, two-thirds of Americans said the pandemic has brought their families closer together. The experience has inspired them to have important discussions about financial planning, preparing for retirement, end-of-life issues, and strategies for protecting and improving health. Perhaps we could also count our new proficiency in Zoom and FaceTime!

     Also, we retirees have something going for us:  We have seen a lot of problems come and go. We have a longer-term view. We realize that as hard as it is, this too shall pass.


Wisewebwoman said...

Great post Tom. Yes, the effects are rippling and
devastating to some. And retirement plans become uncertain in the face of the needs of loved ones

There is no predictability of any kind to this pandemic and it may, indeed, be, as some say, a forging of a new world.


gigi-hawaii said...

David and I are financially secure during retirement. Our two daughters have full time jobs as a school teacher and a physical therapist.

Susan Zarzycki said...

Great commentary on how Corvid is affecting our families. We didn't realize how good we had it until "it" was taken away, diminished or reconfigured causing unlimited hardships to many. Although my family has seen some changes in their finances, lifestyle changes such as homeschooling, isolation,the way they shop, etc, has been the hardest to deal with emotionally. It's hard to comprehend that in this age how this virus could have swept the world like an out of control wildfire but it has and we are left with a new reality, still fighting brushfires. God gives us many blessings but He also allows bad things to happen to good people.💖

Anonymous said...

Young people seem to spend money like it is water even with good jobs..All I want is a kidney to live, going to dialysis 3 times a week albeit in the early morning hours, takes it effects upon me..We are hunkering down and getting thins done on our 42 years young house needs it..We go very little places and enjoy the trips when we can..The small trips make up for all the spent at the dialysis place, but grateful I am and so is the hubs..we have each other, a tiny home we are proud of our only child we are the proudest of all, she is young and saves what she works for daily..IF one has family to love and be loved by one can endure anything..As my favorite group from the 60's said it best Love is all you need..have a most wonderful week enjoying your blog daily!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

ApacheDug said...

Wow, what a great post Tom. I’m sorry to read about the pressures your kids are going thru... it’s startling to sit here & realize that there are very few people I know who haven’t been affected. I contracted Covid-19 when I was in the hospital (for something unrelated) in July, was bedridden for 10 days and to be honest, still dealing with a couple symptoms. It’s like nothing I’ve experienced before. At the same time, I feel fortunate to be where I am in life. Not old enough to collect social security just yet (still a couple years away) but have enough in savings & investments to not have to worry about a paycheck... I just wish family & other loved ones were as fortunate. At least (for now) the people I know are healthy.

DJan said...

Well said, Tom. I too am grateful that in retirement I have not had any income cuts and am spending less money than usual. I am spending some of the excess by contributing to causes I believe in. Both of my children have passed away, so I don't even have them to worry about, as I'm sure I would be doing were they alive. Thank you so much for your thoughtful posts.

Arkansas Patti said...

Very well stated about the difference in the age group's views on Covid. It would help if both groups could understand where the other is resting their feet. You made me want to be a bit more patient about the younger ones who don't seem to care if their activities might threaten the health of older ones and to realize that some of them are really hurting financially right now. I should be grateful and less judgmental. Thank you.

Tom said...

DJan, I didn't know that, and I'm so sorry to hear. And yet you still live a full and positive life. An inspiration. And Patti, I guess we should all try to be more grateful and less judgmental. Hard to do, though, isn't it!

Rian said...

Good post, Tom. Between this one and "The unraveling of America" that DJan posted, it's been a thought provoking morning. DH and I are retired and own our home, so the pandemic hasn't caused undue havoc - except for not being able to get together with family and friends... as well as the fear of contacting the virus (since both of us are in our 70's and cancer survivors).

Of our 3 kids, all 3 work outside the home (as do their spouses). One continues to work without cuts, one is having substantial cuts and may be furloughed in the near future, and one is without work at the moment. So yes, we are all affected and may be more so as this continues. Families will pull together to help each other and this may affect everyone's health and financial future. But so be it.

The pandemic may indeed pull us together while the political situation is pulling people apart. It's difficult to stay in the middle.

Janis @ RetirementallyChallenged said...

We have some college age renters in the neighborhood. Although they are pretty quiet most of the time, last night they had a party with 20 or so of their friends. No social distancing at all. In normal times my husband and I might have been a little irritated at having to miss our normal 10 pm bedtime, but it was hard to be angry. They are young and anxious to start their adult lives. I can't imagine what the future looks like to them. Although partying in close-quarters might be reckless (especially if they live or interact with older family members), they probably also feel they can't put their lives on hold.

Sue said...

Dear Janis, of course young people are going to party and not worry. Party - that's what young people do. Worry - that's for the old. Sometimes i can't help but to suspect that the old - armed with their precious portfolios- are just plain jealous and really resentful of young people. Such is life where evolution rules.

Laurie Stone said...

Because of Covid, I now have two grown sons living home (one going full-time to grad school and another saving his money so he can get his own place). Its not what I expected at this time of life, but I'd be lying if I said I didn't like it. My guys pitch in, including cooking, and are great company. Sometimes I look around and know I'll miss these days.

Rebecca Olkowski said...

I'm more in that 10 percent of women who have lost spouses/partners who had unpredictable careers so even though I have SS, I'm still working to make ends meet. Fortunately, I'm self-employed working online which hasn't been as impacted. But for those of us, there are gig-economy jobs to make up for shortfalls. And, so far, my kids are still working and doing well.

Barb said...

I'm on social security and a pension and am the only one with a stable income round here. My adult son was furloughed six weeks before returning to work. He is now back at work he also socializes and goes to a couple local establishments but always with the same small group that he works with. Otherwise his life is on hold. No new Career, no ew apartment,no real social life. He will need help from me for awhile and thats okay. I dont know what the future will bring but shutting down the economy isn't the answer. If I have to hibernate I will. Contrary to Sue's thinking I am neither jealous nor resentful of young people. Mainly I'm just concerned for them.

Olga said...

Okay, this is the third time in three days that I have heard/read the phrase "this too shall pass." I can hardly wait!

Linda Myers said...

Well said, Tom. I am grateful to be in the stage of life I'm in while Covid is among us. It has affected us only minimally - can't travel to Europe this year, can't go to the theatre or restaurants. The hardest part for me, spending this summer in Tucson, is that it's been too hot to exercise or sit on the porch with a friend.

We have a blended family of eight kids, and we've offered help if it's needed, but so far they are all okay. I did help a refugee in France with his rent for several months, as he's without parents and the same age - 20 - as four of our grandchildren. I expect we'll be needed at some point, to make a difference in the lives of those more severely affected.

DavidH said...

Trump is trying to end and defund Social Security. He has suspended the payroll tax. This maniac must be stopped. He is trying to kill upwards of 60 million people. This is in addition to the many deaths he has caused through his poor response to the coronavirus virus. Remove Trump now!

S. Lawless said...

DJan I am so sorry for your losses.

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