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Here We Go Again!

By Terry Savage on March 23, 2020

As we enter the third week of financial chaos, the market is still facing a lack of data –and that is triggering yet another sell-off. We still don’t know the extent of the spread of this dread disease, but we can extrapolate. And we are getting a better handle on the economic impact, which will be severe.

But the great unknown is exactly what the Federal government is going to do – and how long that will take. That’s enough uncertainty to take the stock market down even more. The Sunday evening announcement that Congress couldn’t get together to pass a bill was all the futures market needed to plunge “limit down.”

Despite multiple assurances that the “government will do everything necessary” in terms of throwing money and resources at the economic problems, the reality is that the government hasn’t gotten itself organized to even deal with the basic requirements of fighting this virus. The national guard is not the answer; masks and ventilators are what is needed.

I’m trying not to be political here, but it’s hard to escape the horrible reality that Washington is just a big, disorganized mess. And that’s not good for the people who are suffering most. I know I’m supposed to give you my thoughts on the market, your 40l(k) plan, your personal finances. And I will do that in a moment. But my mind and heart go out to the people who are worried about how they will pay the rent, put food on the table, and keep their children safe – no to mention getting medical care if necessary. Okay, enough of my rant.

Wait, just one more thing. My good friends, Greg and Diane, are adopting a dog from a shelter this week, to make room for the onslaught of pets expected to be dropped off (or abandoned) by people who can’t feed them or take care of them. Could you consider fostering? Contact your local shelter.

Life Insurance, Estate Planning, Taxes and RMDs

OK. On to personal finance. Let me start with the most macabre. Byron Udell of Accuquote.com reports a surge in applications for term life insurance – policies offered by companies that do not require a physical examination! Stick with me on this one. My immediate reaction was: “Are the life insurance companies even issuing policies now?” And the answer is yes – if you act quickly! Udell figures the cost of simple term life insurance will more than double as the mortality rate from the Coronavirus gets factored into price.

Udell says that any term policy already issued — assuming it has guaranteed level premiums — cannot add surcharges. So if you have an existing level term policy, no worries there. But his advice for people who think they are under-insured: “As of today, folks that want guaranteed low cost, high quality, life insurance coverage can still get it at pre-covid-19 pricing, but no one knows for how long. So, if you’re thinking about life insurance, get it now, while you can, before they change the rules or the pricing, and obviously, before you get sick!” (Go to www.Accuquote.com or call 800-442.9899.)

I told you it was morbid – but I’m supposed to alert you to personal finance issues. So here’s another one that crossed my inbox. You know I’ve been trying to get you all to make an estate plan. Well, the latest press release comes from a law firm (which shall remain unnamed) announcing an upswing in clients requesting the creation or update of their wills and trusts!

Says the release: “While it certainly may be connected to concerns about the Coronavirus . . . it also has to do with a sudden abundance of spare time. Among the most asked questions: whether the estate planning work can be handled remotely.”

Obviously, this virus threat is making us all reconsider our mortality. So in that spirit, I suggest you might want to download my free Personal Financial Organizer form at TerrySavage.com, so you can list all your assets, insurance policies, credit cards, financial accounts, etc., just in case your family might need that information. If you’re stuck at home, filling out this form might be a worthwhile project in any case.

More personal finance notes: TurboTax issues a reminder: “The Treasury announced the federal tax filing deadline for 2019 will be extended to July 15, 2020. However, taxpayers getting a refund are encouraged to file now and get their money. Last tax season close to 72% of taxpayers received a tax refund close to $3,000, they note. But if you owe money, individuals and self-employed can defer tax payments (up to $1 million) tax and penalty-free, until the July 15th filing date.

RMDs. Several of you have written noting that Required Minimum Distributions from IRAs will be based on those much-higher valuations of your accounts at year-end 2019. You can be sure I will be leading the charge to get some kind of relief on that score. There is precedent, as there was an adjustment made after the crash in 2008. But first we need to get Congress focused on the current important issues. And that brings us back to the market opening on Monday morning.

As a reminder, I have been posting updates and commentaries daily on my website. And I’m trying to keep up with questions posted there on my Ask Terry blog, as well. Please no extensive investment inquiries, though. Now, in an attempt at levity after all this ugliness, I leave you with those immortal words of Sergeant Phil Esterhaus in the TV show Hill Street Blues: “Let’s be careful out there!”

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