COVID’s effects will be felt for generations, from a grandma’s retirement in ruin to a problematic teen inheriting too soon. While nothing can prepare you for the heartbreak of losing someone you care about.
A few years ago, Anna retired with a 390k. Her retirement finances were on track thanks to some careful budgeting and a part-time job. Anna was looking forward to traveling and spending time with her family.
Everything changed because of the Pandemic. Her son contracted the disease in the early days of the pandemic. He died at 35 years old. He didn’t have life insurance. He didn’t have much savings because he was a gig worker.
From April 2020 to June 2021, Anna’s granddaughters, ages 2 and 6, were among the more than 140,000 children under the age of 18 in the United States who lost their primary or secondary caregiver due to the pandemic. One out of every 450 children under the age of 18 is affected.
Anna’s ex-daughter-in-law struggles with drug addiction and ended up losing custody of the children after the divorce, thus Anna became the primary caregiver for the children. She immediately learned that caring for small children as an older adult is more physically demanding than it was while she was raising her son, so she took the painful decision to quit her part-time job so she could devote her attention to her busy grandkids. She wants to do everything she can for these children who have suffered so much, but doing so jeopardizes her financial security.
Far from Alone.
COVID death rates continue to be highest among the elderly, although death rates among younger persons have increased disproportionally. The pandemic increased the death rate for people aged 74 to 84 by 16 percent. According to the Centers for Disease Control and Prevention, it increased by 24.5 percent among people aged 35 to 45. Similar increases were seen in other age groups.
According to Scott Davison, CEO of insurer and retirement firm OneAmerica, death rates have increased by 40% among working persons aged 18 to 64. “Just to give you a sense of how horrible that is,” Davison says, “a three sigma or 200-year catastrophe would represent a 10% increase over pre-pandemic levels.” “Forty percent is completely unprecedented.”
The pandemic’s financial repercussions can last generations, from grandparents raising grandkids to recipients managing an unexpected inheritance to the loss of a household wage worker.
Susan and her husband have had their fair share of financial challenges, including crippling credit card debt and home foreclosure. Susan received a $450,000 fortune after her mother died of COVID. Susan transitioned from living paycheck to paycheck to having a financial cushion.
Susan is overwhelmed by guilt as well. She has pressing financial requirements, but she is emotionally unable to act since she is uncertain how her mom would want the money spent.
Brandon, on the other hand, was dealing with a different type of grief-related issue. Brandon’s parents split while he was young, and his father died of COVID problems when he was just 19 years old. Brandon now had access to close to $1 million in assets as the lone beneficiary of his father’s inheritance. Brandon swiftly depleted hundreds of thousands of dollars without financial counsel, spurred by a party lifestyle, a love of fancy and expensive items, and some terrible investment selections. Brandon simply lacked the mental and emotional capacity to deal with unexpected wealth.
The Long Road
Ed has had persistent weariness and shortness of breath for the past six months, long after he was hospitalized with COVID. He has difficulties sleeping, and his performance at his tiny technology firm is hampered by “brain fog.” He is frequently absent from work. Ed struggles to get out of bed on certain days.
He is concerned that he will lose his job and that he will never be able to work again. Ed is terrified that he will lose his health insurance just as he needs it.
Ed’s work, thankfully, provides long-term disability (LTD) insurance as part of his benefits package, but it only restores 60% of Ed’s pre-tax earnings. Ed’s LTD benefits are insufficient to cover his family’s living expenditures, even if they are members of a dual-income household.
Ed’s employer offers long-term disability insurance as part of its benefits package, but it only replaces 60 percent of his pre-tax salary. Ed’s benefits are not enough to cover his family’s living expenses, even as part of a dual-income household. Ed is worried about being one of the 11 million Americans who owe more than $2,000 in medical debt.
Some Good News
We’ve all been affected by the global pandemic, whether directly or indirectly. For many of us, the pandemic served as a wake-up call, motivating us to improve not only our physical but also our financial health. According to Northwestern Mutual, one-third of Americans say their financial discipline has improved since the outbreak, and 95% believe the new habits will last.
COVID-19 has also sparked fresh interest in life insurance policies, with 31% of Americans saying they are more inclined to purchase coverage as a result of the epidemic. 42 percent of those who tested positive for COVID-19 think they are likely to buy life insurance.
I’m hoping that these good financial practices will persist long after the pandemic has passed so that more people can benefit.