It’s been a September of tumult, not least because of the increasingly messy Equifax security breach. Here’s what I’ve been reading (and writing).
The Equifax Breach
The Equifax data breach has been scary. For several reasons. First, the scale of the breach was massive — literally more than 100 million Americans. Second, the information was so sensitive — Social Security numbers and the like. Third, the advice on what to do about it has been so confusing, with the credit bureaus making it harder by the day to take common sense steps. I asked Liz Loewy, co-founder of Eversafe, a data security company, to sit down with me and answer the questions that I know everyone wants to know. My article in Forbes.
Should The Social Security Trust Fund Be Invested In The Stock Market?
It’s an interesting debate. Currently, the Trust Fund that manages Social Security only has the mandate to invest in Treasury bonds, which are ultra-safe and generally low-yielding US Government debt. What if a portion of the Trust Fund was put in the stock market? This isn’t the idea that George W. Bush proposed built around individual accounts. Rather, nothing would change for individuals, but the fund itself would simply shift to taking more risk in the hope of higher returns. What would be the effect on the US Treasury’s borrowing costs? And would it cause the stock market to become overvalued and crowd out other investors? Penny Wang took up the issue last year and it’s as relevant as ever. Money.
Decline in US Life Expectancy
About a year ago, a well-known academic Angus Deaton released research showing a decline in life expectancy among middle-aged white Americans with low and middle incomes. This was one of the earliest indicators that the opioid epidemic and the shrinking economic prospects for the middle class were having a real impact on macroeconomic data. Here’s a data-driven approach to thinking about this complicated problem, which importantly acknowledges that there are no quick solutions to the rising inequality of life expectancies. StatNews.
Quilt has developed a digital-first life insurance product. We don’t have a financial relationship with them, but think the tool they have is pretty cool, so figured we’d share it with you.
Thoughts worth more than a penny…
Is retirement now a luxury good? Think about it for a moment.
Life Expectancy: Increases in Americans’ life expectancy were broad based for most of the 20th century, with similar gains across the income spectrum. But new research shows that gains in life expectancy are happening in upper socioeconomic classes and lower income white Americans are actually seeing life expectancy declines.
Employer Retirement System: In the case of the old pension-based retirement system we had, the majority of retirees (across all socioeconomic strata) got an inflation-adjusted monthly paycheck from their former employer. The 401(k) and IRA system has not created the same kind of broad-based retirement preparedness. You can see this in the data — the median American only has $2,500 saved for retirement, according to this Wall Street Journal analysis.
Social Security: Since its creation in the 1930s, it has always provided the full benefits promised. But now there’s widespread agreement now that some kind of Social Security reform is inevitable over the next two decades and that reform will likely cut benefits.
So what does all this mean? The forces that created mass-market longevity increases and retirement security are now all reversing. So it’s more than just hyperbole to ask the question — in a generation, will the average American be able to retire at all? And how will these trends influence what retirement looks like relative to what it once did (or does now)?
Finally, thanks for keeping up with us, and hello to our new readers! If you were forwarded this by a friend, give them a big thanks from us and sign up here for monthly updates on how longer lives are changing the health and financial preparations we make.
To Your Continued Longevity,
Matt and the Blueprint Income Team