Coronavirus Shock Is Destroying Americans’ Retirement Dreams
For older people, the coronavirus crisis has been an appalling shock. Many can’t travel or see grandchildren. Even buying groceries is a risk. Their life savings are melting as the global economy shuts down and financial markets plummet. The pain may be particularly acute in the U.S., where Americans rely on a retirement system that was broken well before a pandemic dashed it to pieces.
Tony Yang received his Ph.D. in history from the University of California, Riverside in 2009. Since then, he’s worked on and off as a history lecturer, but has had to depend on unemployment and food stamps to get by.
In his best year since getting his Ph.D., Yang says he made about $32,000; in his worst, about $10,000. He says there’s a perception that if you have a doctorate, you automatically walk into a high-paying job.
“I have the prestige of holding a Ph.D., but that [isn’t] paying the bills,” he says.
via Why So Many Ph.D.s Are On Food Stamps : NPR.
The time usually spent on reading and writing this past month was completely devoured by reading and staying current on the global financial meltdown. It is at precisely times like this when we try to figure out what’s happening and what it means to each of us. After absorbing a riduculous amount of information I came to the realization that this was becoming an obsession. As events continue to unfold I’m certain my obsession will only get worse.
OK. What if I manage a life underwriting division for an insurance company? I thought about the possibilities and decided to make some predictions. If I’m wrong, who cares? But if I’m right, my blog traffic will go through the roof.
In no particular order this is what I think could happen.
- In the future there will be fewer financial firms. If you haven’t already noticed, this is happening at a dizzying pace. There will be more consolidations, mergers, and divestitures all contributing to a new financial landscape.
- Management will ask more questions. How do you manage concentration risk? Do you have checks and balances in place? Do you use external independent third parties to audit your underwriting? If no, why not? The devil will be in the details and personally I would rather have the answers to questions like these before they get asked.
- The people asking these questions may be your new owners (see #1).
- There will be a greater emphasis on risk management rather than risk assessment and selection. Don’t rely on your actuaries for this one.
- There will be more, not less, regulation.
- Pressures to cut costs will intensify.
Peter Drucker once said there is nothing so useless as doing efficiently that which should not be done at all. There will be new and better models for the underwriting function that at present do not exist. If you’re excited about remote underwriting, the future gets even better with talent spread around the world, web meetings, office-less office workers, and more.