That means you and I probably know someone who had planned to retire just as the Coronavirus-caused financial disaster struck. 

Based on my experience, most of those 10,000 had already made peace with the fact they would have to do without a few things in order to make their retirement budget work. And that was before COVID-19. 

Perhaps they’d seen their parents retire in a world offering government-backed bonds and FDIC bank CDs paying 6% to 8% on every retirement dollar. Today’s Coronavirus-affected CDs and government bonds struggle to pay 1%. 

Without trying to debate the pros and cons of the various state and national “stay-at-home” orders and the huge portion of our economy that has been shut down, I can say I empathize with the protestors gathering at state capitals across the country, urging governors to re—open the economy. 

No one is arguing that shutting down the economy is hurting people. The argument the government is making is that the harm done is for the greater good. 

That “greater good” argument is the same one the Federal Reserve made in its last two attempts to stimulate the economy after major economic shocks – there was the dot com bubble in 2000, followed by the financial crisis of 2007. In both cases, the Fed stepped in and lowered the interest rates borrowers had to pay, thus stimulating the economy.

It was as if every saver in America was told, “We’re going to reduce the amount of money everyone else is going to pay you so we can help the rest of the economy.” 

I’ve always been amazed that retired people have not lined up in front of the Federal Reserve with “Don’t mess with my CDs!” signs and loud chants of “Yo Ho, You’re not great, you reduced my interest rate!” 

But the Fed has gotten away with this strategy with little or no push-back from the saving class. And now, yet again, savers will pay a dear price for the Coronavirus.

What is a retiree to do?

Well, you can lower you living standard. If you have $300,000 and want to live off the interest (assuming you’ll get 1%), you’ll need to learn to live off the $3000 per year that will yield you. That’s about $250 each month.

But what if you didn’t need $250 per month, but $1500? You could do that, but you’d be assured of running out of money in less than 20 years. That’s because your $300,000 only earns $3000 each year in interest. So, the additional $15,000 per year you would be spending in this scenario would have to come from principal…which would eventually run out. 

That is, unless you had a group of cooperative and compassionate friends that said, “Don’t worry about it. If you happen to out-live your money, we promise to just keep sending you the $1500 per month as long as you live.”

That would be amazing!

You and I probably don’t have enough friends with enough financial heft to make that a meaningful promise, but I can suggest the next best thing.

You could make that same deal with a large group of total strangers. All of you could put $300,000 each in the pot together. In this example, we’ll assume you are all the same retirement age. Assuming you hire a very nerdy math genius (known as an actuary) to calculate your life expectancies, you could be sure that for every one of you that outlived your $300,000, there would be someone else who didn’t because they died early. 

Each person died before the average life expectancy would leave a pool of money. Actuaries call this “mortality credits.” The mortality credits are used to pay the income to the people in the group who happen to live longer than average. 

I’m describing the broad outlines of a guaranteed income annuity issued by an insurance company. The insurance company does the pooling of the risk (that’s the large group of people), the actuarial calculations and provides the guarantee that the income will last for a lifetime (no matter how long). 

The Beatles used to sing a song with the lyric, “I’ll get by with a little help from my friends.” Ringo Starr is 79 today.

If you don’t have as much money as Ringo, you may have to retire with a little help from your friends – or at least a group of people who have all agreed to promise one another that their incomes will be enough, and that they will last as long as each of them do.

That’s a pretty amazing trick, but one you can’t do alone. 

You need a few “friends.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

Now, if you’re a doctor or nurse tending to Coronavirus patients, a banker pushing out PPP loans or a grocer working overtime to restock the toilet paper shelves, this doesn’t apply to you.

But waaaay more of us than normal are home full-time, working part-time for full time pay (come on, you know who you are) and fondly remembering this concept called “work-life balance.” Or you may be temporarily out of work, waiting for the next opportunity. 

Either way, the one thing you’ve got in common is more unstructured time than normal.

Do you have anything to show for it?

This Coronavirus pandemic has caused historic amounts of financial damage. Why don’t you take this extra time to get ready for your personal post-pandemic cleanup? What do you say we get ready to do some spring cleaning?

But where to start?

Protection. If starting with protection doesn’t make sense now, it never will. This pandemic came completely out of the blue and there lots more calamities than we can imagine capable doing similar damage. We need the protection of legal ownership arrangements (corporations, LLCs) and insurance to reduce the risk of any single calamity causing us to cash in our chips. Work with a seasoned professional that can audit your situation and make recommendations that fit you.

Savings. When the crisis is regional or national, governments and charities swoop in with piles of money. Good for them. But what happens when you experience a once-in-a-lifetime calamity of a purely personal nature? You lose your job. You get really, really sick. For these reasons and a thousand others you cannot now imagine, you need savings. More savings than you might normally think necessary. My recommendation is an amount equal to six months of your income. Yes, it might take you several years to get there. That’s all the more reason to get started now. 

Debt control. If you aren’t saving at least 10% of your income, you’re probably in debt. And your debt payments are likely well over the 10% of income threshold. Get a plan for getting out of debt and staying out of debt.

Invest. Investing is sexy. Prominent investors get interviewed and appear on television. It’s what the cool kids do. My advice about investing is simple: don’t invest too soon and don’t invest too little. 

Investing too soon means you short-circuited the protection, savings and debt control aspects of your plan. Investing too little means that when it came time to invest, you didn’t invest enough – you spent too much. 

Retirement. Retirement planning is like building a house for some day in your future. If you take short-cuts with respect to the foundation, you won’t really experience the problems until you move in. A sound, worry-free retirement requires the financial diversification of investment portfolios and the actuarial diversification of insurance policies. The two in proper proportion form the foundation of a sound, worry free retirement. 

Legacy planning. There are two, and only two, things that can happen to every dime you save for your retirement. You will either spend it, or you will leave it to someone else. Those jokes about the last check to the undertaker bouncing are funny, but nobody does that (voluntarily). 

Who knows when all this will be over. Soon I hope. 

But when it is over, would you rather have done your financial spring cleaning and be ready to move forward, or still sitting in a pile of mess, wondering what to do next?

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

And not a moment too soon.

The COVID-19 virus has delivered a shock to the world economy the likes of which has not been seen in a long, long time. Businesses are shut down and individuals are staying at home. A national economy that was humming on Valentine’s Day did a face plant by April Fool’s Day.

In response, Congress just passed the Coronavirus Aid, Relief and Economic Security Act (or C.A.R.E.S. Act), which will provide about $2 trillion in economic relief. That’s about 10% of the entire gross domestic product of the US, a staggering number. 

Here are a few high points relevant to individuals and small business owners.

Tax returns / payments. Prior to the passage of the CARES Act, the US Treasury announced that both income tax returns and payments due April 15, 2020, would automatically be extended to July 15, 2020. No extension forms need to be filed.

Money for individuals. Many Americans will receive direct payments of $1,200, or $2,400 for joint filers, plus $500 for each qualifying child. Generally speaking, these payments will come to individuals making $75,000 or less (or combined if filing jointly). If you make more than $75,000, the amount will be reduced, ultimately to $0 if you make more than $99,000 per tax payor. The payments will not be taxed. There’s no need to apply for this money.

Money if you are unemployed. Unemployment benefits are increased by up to $600 per week, on top of what the state already pays. Part-timers and the self-employed may also qualify. You can file for unemployment at http://www.louisianaworks.net/hire. 

Retirement account changes. The 10% early withdrawal penalty is waived for “coronavirus-related distributions” taken in 2020 up to $100,000 per individual across all company-sponsored plans and IRAs.

You qualify for a “coronavirus related distribution” if you, your spouse, or dependent have a diagnosis of COVID-19; or you been financially impacted by related issues.

Any distributions you take out are still taxable, but you get to spread payment of that tax evenly over the next three years. 

They’re also giving you three years to roll the funds back into the plan or IRA.

Student loans. All payments on student loans have been suspended until September 30, 2020. Interest will not accrue during this period. 

Money for small business. The federal government is providing financial relief through multiple programs. The first is…

Paycheck Protection Program (PPP). Small businesses (500 or less employees) and non-profits may apply for a loan equal to eight weeks of payroll costs. That includes payroll, benefits, rent, utilities, and interest on mortgages. If the employer keeps everyone on the payroll (more or less), the loan will be forgiven. It will be free money, also tax-free. Business owners should apply through their bank or other lenders eligible to make SBA loans. The second program is…

Economic Injury Disaster Loan (EIDL). EIDLs are lower interest loans of up to $2 million designed to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. Principal and interest payment on these loans may be deferred for up to 4 years depending on your circumstances. These loans may be amortized for up to 30 years. 

We’ve not seen government intervention on this scale since World War II. 

If you are working and your income has not changed, all this may seem excessive. But if through no fault of your own, you’ve been quarantined from work (not to say normal social contacts), this lifeline may be your only hope of economic survival. 

Let’s all watch out for one another, continue being safe, and focus on things for which we can be grateful. 

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information at http://www.ruston.argentadvisors.com/important-disclosure-information