Dori on the Dime

How is Covid-19 Changing U.S. Retail?

How is COVID-19 changing U.S. retail? Changing shopper preferences and habits, and cutthroat competition.

Some major retailers are closing their doors, but others are thriving by offering new products, and startups are developing products to ease coronavirus stress. In retail, it always adds up to “survival of the fittest,” but in coming months, “the industry must brace for major upheaval,” says this May 2020 analysis from the Wharton School.

In-store shopping, which generated over 80 percent of retail sales before COVID-19, is expected to be critical when doors open, even for retailers with strong online operations, “Click and collect” popularized during the pandemic may become part of the “new normal” retail experience. Also expected to gain traction, too are discount and value sectors including grocery, apparel, and general merchandise, as well as private-label (Trader Joe’s, Aldi, Walmart, Target, dollar stores) and off-price retailers (TJ Maxx, Marshall’s, and Nordstrom Rack).

What will the retail landscape look like, post-pandemic? Business reporters can find the clues by doing some legwork on these three angles:

The shifting state of major retail

Some major retailers are going out of business, some are closing stores, and others are innovating. J Crew, Neiman Marcus, and Nordstrom announced bankruptcy filings early in the pandemic, but to date, nearly two dozen major retailers have filed for bankruptcy. As shoppers continue to veer away from brick-and-mortar stores, and malls, as many as 25,000 stores are expected to close in 2020, up from 9,800 in 2019, according to projections from Coresight Research.  Meanwhile, companies including Nike, Under Armour, Gap, New Balance, and Jockey have been producing pandemic-related products, while some have switched lanes: Fiat Chrysler began producing face masks, and Anheuser-Busch InBev made hand sanitizer.

Draw up a list of the major retailers with a physical presence and/or strong sales in your area to interview. What brands and retailers are positioned for a rebound, and why? Use your news organization’s social media to ask consumers how their shopping habits and priorities have changed.

The state of retail in your state

While the nation’s largest private-sector employer directly employs 29 U.S. workers, retail supports one in four U.S. jobs, according to the industry’s trade association, the National Retail Federation (NRF). To see the impact of COVID-19 on your state, click on this map from the NRF to get a picture of retail in your state. Talk to your state Chamber of Commerce, and Department of Labor to get an insight on what they are seeing. How are they working with local business districts to help them innovate? Are any companies diversifying their supply chain, and bringing some manufacturing back to North America? Are any operations making plans to open micro-factories?

What local businesses and startups are thriving because of COVID-19?

After the Great Recession, cupcake bakeries and food trucks lifted local economies. In Springfield, Missouri, sales exploded in March for StepNPull, a hands-free, foot-operated door opener. What local businesses are doing well in your area? This list from the U.S. Chamber of Commerce highlights 15 small businesses that are thriving. What surprising startups are making a splash in your area? How will their operations change post-pandemic, to keep growing?

Help Your Readers Weigh the Pros and Cons of 401(k) CARES Loans

In addition to economic stimulus checks, the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, allows U.S. workers, small business owners, and retirees affected by COVID-19 to take out interest-, penalty- and tax-free loans of up to $100,000, or 100 percent, and whichever is lower, from their 401(k) and other retirement accounts.

The new rules apply specifically to those who lost income after being furloughed from their jobs, or quarantined;  had to stay home to care for their children; or business owners forced to cut operating hours or shut down their businesses.

Help your readers weigh the pros and cons of a CARES loan by looking into these questions:

What exactly does CARES allow?

The retirement provisions of CARES are only in effect until Sept. 23, 2020, which makes it critical to clarify what CARES is, and is not. For example, employers aren’t required to offer loans under CARES. Here’s a brief summary:

  • CARES doubles the withdrawals allowed on 401(k) plans, a personal retirement account, or a combination of these accounts from $50,000 to $100,000.
  • Loans can be paid back over three years instead of the typical 60 to 90 days, and any taxes paid are refunded;
  • Under CARES, those under the age of 59½ can withdraw without paying the 10 percent penalty;
  • In addition, the legislation lifts automatic withholding for taxes, which typically requires at least another 20% of account value;
  • CARES waives Required Minimum Distributions (RMDs) from retirement accounts until 2021.

This backgrounder from U.S. Senator Chuck Grassley (R-Ia) offers more information and contacts.

Will CARES benefit me?

Ask readers who qualify for this CARES benefit who have applied, or are considering, a CARES loan, to join a panel to discuss their decision. Also include a few Certified Public Accountants (CPAs) and financial planners who serve clients in various income levels, and across different age groups and occupations.

A global pandemic on top of a recent market downturn makes it a tough time to weigh this question. In the first quarter of 2020, account balances from the previous quarter fell from $112,300 to $91,400 on 401(k) plans and from $115,400 to $98,900 on Individual Retirement Accounts (IRAs), according to Fidelity, considered the largest record-keeper with 16.2 million accounts.

Which is better for me—a 401(k) loan or a distribution?

Interest-, penalty- and tax-free CARES loans are a benefit if they’re paid back over the short term, but American consumers haven’t had the best track record in paying back 401(k) loans. In any five-year period, two in every five workers take out 401(k) loans,  according to a 2017 study from the Pension Research Council at the Wharton School of the University of Pennsylvania. But over twice that number—86 percent of workers—defaulted on their loans after leaving a job, according to the National Bureau of Economic Research (NBER).

Loans and distributions both take money away from future financial gains, so tread carefully, say financial advisors.  What other financial alternatives are there to consider?

Help Your Readers Spot These Sneaky COVID-19 Scams

As of May 7, 2020, the Federal Trade Commission (FTC) received nearly 39,000 complaints from consumers who reported losing a median of $503, for a cumulative loss of $29 million.  (The agency provides daily updates.)

But these devious thefts aren’t over yet. U.S. households won’t receive all of the economic stimulus money voted by Congress until September, but scammers don’ have to wreak havoc with your reader’s finances, health, and peace of mind. Report this breaking personal finance story ASAP by looking into the three ways scammers are trying to worm their ways into your readers’ pocketbooks:

Scam #1: “Hello?” That’s not the IRS calling

Use your news organization’s online channels to invite readers who want to participate in a story on COVID-19 phone scams. Put out a call for readers who have been scammed, as well as those who haven’t, and have them engage in a Q-&-A on the warning signs. Also include a certified counselor, who can offer vulnerable readers valuable tips on how to stand up to a scam call.

The Internal Revenue Service (IRS) never calls taxpayers or asks for their bank account numbers. But that’s what scammers are doing, claiming they need a bank account number to deposit a taxpayer’s economic impact payment. As of April 28th, the agency reported that nearly 90 million (89.5 Americans) had received $160 million, either through direct deposit or a check. That represents just about 55 percent of the money sent out to date, so this threat isn’t over yet.

Scam #2: Knock, knock: Avoid this salesperson

“Door-to-door sales” gets a new twist during a crisis: scammers claiming to represent the IRS or even the National Guard, which has been deployed to some areas of the United States during the coronavirus pandemic. For a fee—or in exchange for valuable personal information—the scammer promises to expedite aid. Online, scammers are busy selling products that never arrive, or marketing phony medical products and therapies. To date, the FTC has sent out letters to 145 such companies. Is any company in your reporting area?

Scam #3: Make coronavirus donations count

Some of your readers are in a position to donate part—or all—of their economic impact payment checks. Help them direct their dollars to reputable charities by developing a story on the failproof ways to do that. The FTC offers a comprehensive checklist here. Some highlights:

• Check a charity’s name through a simple online search using the words “scam” or “fraud”; fake charities will typically use names similar to those of well-known organizations.

• Review ratings on the FTC’s link, or by searching Guidestar or Charity Navigator, which has developed this list of approved COVID-19 charities.

• Don’t rush, says the FTC. Only scammers rush victims and ask them to make donations in cash, or with gift cards and wire transfers.

Help Your Older Readers Avoid Becoming the Next Victim of a Financial Scam

As the elderly population of the United States continues to grow, there’s a sizable personal finance story for business staff to report separately, or develop into a blockbuster series: the financial exploitation of seniors.

U.S. seniors lose approximately three billion dollars a year to financial scams, according to the Senate Special Committee on Aging.

Thieves are increasingly targeting seniors—whether they are well-off or low-income—because they believe they have substantial assets sitting in their bank and brokerage accounts. Elder financial scams are now so widespread that the National Council on Aging (NCOA) matter-of-factly calls them “the crime of the 21st century.” But they often go unreported and aren’t prosecuted, because they’re considered a “low-risk” crime.

In the first of a two-part series, we’ll look the three common ways fraudsters contact their victims: online, by phone, and in person. In the second part, we’ll turn our attention to how to recognize the signs of a scam and avoid becoming the next victim.

Senior Scam #1: The “elder fraud web”

Seniors lose $650 million strictly to online fraud every year, reports the Washington, D.C.-based Aspen Institute—a 400 percent increase since 2018. E-mail and phishing scams are typical online scams, according to NCOA’s “Top 10” list of financial scams, but surprising types of online fraud involve offers of counterfeit prescription drugs and fraudulent anti-aging products.

Assemble a panel of readers who are willing to share their experiences with online fraud. Also include a technical expert who can address some of the measures that seniors typically fail to take in safely using online communication tools.

Senior Scam #2: Phony phone calls

Perennial phone scams involve callers claiming to represent the Internal Revenue Service (IRS) or the Social Security Administration (SSA) are on the rise. Then there’s the ever-popular scam with a thief posing as the victim’s grandchild. There’s a new twist on the ever-popular “grandparent” scam that consumers aren’t aware of, reports the Federal Trade Commission (FTC). Victims are losing a median of $9,000.

As the COVID-19 global pandemic continues, some of your senior readers may have already fallen victim to one of the phony charities charity that often pop up during a disaster. Inform your panel of readers on how to check a company or nonprofit’s ratings on Guidestar or Charity Navigator if they want their contribution to be properly used, as intended.

Senior Scam #3: The in-person “touch”

Then there’s the personal touch—literally speaking. Fraudsters will show up at funerals claiming the deceased owes them money, offer bogus medical services at makeshift mobile clinics, or sell unnecessary and costly funeral services to a grieving widow or widower. But more often, the deceiver is someone known to the elderly victim: a family member, a friend, or a caregiver. Over 90 percent of such crimes are perpetrated by someone known to the victim, according to the National Center on Elder Abuse (NCEA).

Invite a NCEA representative, along with an elder attorney and a community-based senior advocate, to join your panel. Ask them to address the tough question of how an elderly loved one can financially protect themselves.

How Are Your Readers Planning to Spend Their Coronavirus Check?

That may seem to be a particularly pointless question to ask during the COVID-19 crisis. Year after year, surveys from private industry and the federal government show the same dismal picture: Nearly half (49 percent) of all U.S. adults continue to live paycheck to paycheck, and they don’t have three months of emergency expenses to pay bills. A recent survey, the 2020 Financial Planning Survey from First National Bank of Omaha (FNBO), reinforced those statistics.

But there were two significant shifts among the 1,067 respondents surveyed: Approximately 91% said they wanted to improve their money habits in 2020, and 83 percent said they planned to budget their money every month.

The unprecedented COVID-19 health crisis may also be an unprecedented opportunity for U.S. consumers to reinforce sound money habits. Business reporters can help readers by focusing on the following topics:

Plan Your Spending Before Checks Arrive

Some of your readers have only a $1,200 CARES check to look forward to, and no unemployment, while others will collect unemployment, or are still employed and have an emergency fund; regardless, the task before checks arrive in mid-April is to make a plan on how to spend the money. Asking creditors to delay or lower payments, and contacting mortgage assistance programs, are two strategies.

Invite readers across all income levels and ages to join an online discussion with a Certified Public Accountant (CPA) who holds the Personal Finance designation, and several financial planners who work with clients of different income levels and ages on these and other suggestions.

Plan Your Spending After Checks Arrive

Spend the coronavirus stimulus check the basics (food, housing, healthcare), and put anything left over into an emergency account. If you’re still employed and have enough emergency savings—donate the money. You can deduct up to $300 on your 2020 taxes, because of a provision in the CARES relief bill.

Debt has been increasing—and personal savings decreasing—since the financial crisis of 2007-2009 and the Great Recession in 2019. In June 2019, U.S. credit card debt topped $1 trillion dollars, according to the Federal Reserve, and the average credit cardholder now carries $6,194 in debt, according to Experian’s 2019 Consumer Credit Review.

What If Checks Don’t Arrive Automatically?

They won’t, for individuals who earn low wages or have no income and don’t file an income tax return, or their financial circumstances recently changed. This guidance from the Internal Revenue Service (IRS) explains the details. In the former case, they may have to fill out a 1040-EZ form, for the U.S. Treasury to process their check; in the latter, if a taxpayer lost a job due to COVID-19, but hasn’t filed their 2019 tax return yet, they may have to wait until next year to receive that additional money. A check will be mailed to taxpayers who moved and closed the bank account that the IRS has on file. One way to correct that to file your 2019 tax return. Enlist the CPA on your panel to answer reader questions.

Explain These 3 Consumer Benefits in the New Secure Act

As reported earlier in this blog, Congress approved a new law to improve the retirement security of U.S. workers just before Christmas of 2019. The “Setting Every Community Up for Retirement Enhancement,” known as the SECURE Act, took effect on Jan. 1, 2020 and introduced the most far-reaching legislation on retirement since the Pension Protection Act of 2006.

The story that got most of the attention focused on the end of the “stretch” Individual Retirement Account (IRA) for middle- and upper-income Americans, which prior to the change of law had allowed non-spouse beneficiaries to withdraw inherited money over their lifetime and avoid paying taxes.

Business reporters can develop a series of linked stories on SECURE. Report on one, or all, of the consumer stories suggested below, which describe the new law’s benefits for workers, parents and those with student loan debt. Then add the second part of the series, by reporting the stories that focus on your local business community of small-business owners and 401(k) administrators.

Are more older workers saving for retirement?

Any number of surveys, including this 2018 report from the Stanford Center on Longevity, finds that older workers aren’t saving enough for retirement. Until SECURE, workers who reached the age of 70½ had to stop contributing, and start withdrawing, from their retirement accounts; now they keep contributing indefinitely as long as they are employed. In 2021, SECURE will allow employers to offer long-term, part-time employees to save for retirement; previously, workers couldn’t contribute unless they worked 1,000 hours a year.

Use your news organization’s social media channels to engage with readers. How many intend to take advantage of—or are even aware of—the new law? Also contact the human resource departments of several small, medium, and large businesses in your reporting area and ask what processes they’ve put in place to update their part-time and older workers on SECURE’s benefits.

Are parents planning on children in 2020s?

The new law allows parents to withdraw up to $5,000, penalty-free, from a 401(k) or IRA after the birth or adoption of a child. Considering the cost of raising a child today, $5,000 is a substantial benefit. In 2018, it cost $233, 610 to raise a child, according to the U.S. Department of Agriculture.

Loop a Certified Public Accountant (CPA) and a financial planner into your discussion to review all the family-friendly tax credits available to prospective parents.

Are readers tapping SECURE benefits in 2020 to pay off student loan debt? Student loan debt is soaring and becomes a harder struggle for those with families to raise. Over the past three decades, the cost of college has tripled at public universities and doubled at private institutions, according to the College Board. SECURE allows the holder of a 529 education savings plan to withdraw up to $10,000 to pay off certain student loans, which grants substantial relief. The average student loan debt is about $30,000.

Nothing Like a Global Health Crisis to Focus Attention on Investing Basics

As reported on businessjournalism.com in mid-February, the coronavirus outbreak in China has begun to affect retail markets  in the United States. The downward dip is likely to continue, which gives business reporters a steady stream of these stories to pursue in the coming weeks and months.

But this global health crisis should also prompt reporters to look at personal finance stories geared toward the average investor. In the last week of February, all three main equity indexes plunged about 13 percent, which officially put the financial markets officially into “correction” territory and added up to the worst stock market performance since 2008.

While the drop in the financial markets may be a strategic time for those with deep pockets to buy stocks, the average investor should take the long view and sit tight. That’s legendary investor Warren Buffett’s advice. His company, Berkshire Hathaway, earns an average annual return of 20.5 percent by investing for the long term. 

No doubt your readers have heard about the importance of long-term investing, by allocating their money among different asset classes, diversifying their investments, and regularly rebalancing portfolios, but there’s nothing like a crisis to focus attention. Reporters can help their readers find financial peace of mind by answering them one, or all, of these questions:

Are you invested for the long term?

Use your news organization’s social media channels and assemble a panel of readers across a broad demographic, from Generation Z employees working their first job to Millennials to pre-retirees in their fifties and those already in retirement, and ask them that question. Have a few Certified Financial Planners join your discussion to make recommendations on how to choose sound, long-term investments and answer reader questions. The Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF) offers a primer on these five principles of long-term investing. Another: This refresher from the Securities and Exchange Commission on investing basics.

Is your portfolio diversified?

All stocks, or all bonds, do not make for good diversification. Neither does investing in one sector, or type of stock, such as technology. Straight talk from personal finance “guru” Ramit Sethi on diversification will appeal to your younger readers. Nolo, which publishes legal books and software, offers information on diversification.  Read them both and fashion the information into a quiz to help readers.

When did you last rebalance your portfolio?

Short answer here: Not often enough. Most investors don’t rebalance at all, according to smart beta and asset allocation firm Research Associates in Newport Beach, California. A good rule of thumb is annually, or every six months in changing market. Ask your readers when they last rebalanced. Have the CFPs on your panel explain the process. Moneyunder30.com, a website founded and focused on investors under 30, offers a good “how to.”

Medicare Beneficiaries May Need an Advil or Two to Navigate Choices This Year

October is a critical month for Medicare beneficiaries to start studying their healthcare choices. During “open enrollment” — the period from October 15 to December 7 this year — those 65 and older can save money on monthly premiums, prescription drugs, and other costs (copays, deductibles and prescription drugs) by changing plans.

But few retirees are confident they can choose a plan that will save them money, says the Kaiser Family Foundation, and this year, the task is complicated by the new Medicare Plan Finder unveiled in late August by the Centers for Medicare & Medicaid Services (CMS). CMS continues to tweak the system to make it more user-friendly but, in the meantime, the tool is creating confusion that makes the process of evaluating healthcare choices harder, say Medicare advocates.

With healthcare costs in retirement rising above the rate of inflation, it’s critical for Medicare beneficiaries to shop the price. Business reporters can their readers evaluate their healthcare choices by answering one or all of the following questions:

What is causing confusion with the new Medicare Plan Finder?

When the new system was introduced, it didn’t have some of the sorting features as the previous Medicare Plan Finder, which allowed beneficiaries to see lowest-cost plans or sort and compare prices at pharmacies. The new Medicare Plan Finder also doesn’t allow beneficiaries to save information without setting up an account. CMS continues to tweak the system, so should consumers wait until November to sign up, as some advocates advise? Another challenge: Just 26% of those 65 and older feel comfortable using computers, smartphones, and other electronic devices, according to a 2017 report from the Pew Research Center.

How can seniors best evaluate their choices?

Assembling a panel of older readers will test your old-school communication skills—you may have to visit senior centers and find other ways to connect with these older readers. Ask your panel to describe their experiences so far with the new system. In 2018 healthcare costs in retirement grew at 4.22%, according to the most recent report from HealthView Services, a leading provider of healthcare cost projections. That number should concern not only those in or near retirement, but those who are 55 and 45 years old, too, who will spend a growing portion of their income on healthcare costs in the future.

What’s happening in your state?

Find out. Call your State Health Insurance Plan (SHIP), which provides free counseling and assistance to Medicare beneficiaries, their families and caregivers. Is your state SHIP struggling to train volunteers before open enrollment begins on October 15? How are volunteers getting the word out to beneficiaries on scheduling calls early, so they can get the help they need in time? SHIP volunteers help beneficiaries obtain coverage through original Medicare, Medicare Advantage, Medicare Prescription Drug Coverage and Medicare Supplement (Medigap), in addition to helping those with limited incomes apply for Medicaid and other programs that help reduce healthcare costs.

Medicare for All–Promise or Peril?

S.1129, aimed at providing comprehensive health care for all Americans, is gaining more attention:The Medicare for All Act of 2019 attracted 13 Democratic co-sponsors in the latest version introduced in the House in April 2019.

But most Americans don’t understand “Medicare for All,” the legislation introduced in 2017 by Sen. Bernie Sanders of Vermont. In their January 2019 Health Tracking Survey, Kaiser Family Foundation researchers found a skew in the public’s understanding about the proposed legislation. Nearly three-quarters of those surveyed (74%) favored a national health plan administered by the federal government—but only 37% agreed with eliminating private insurance.

The political scrum surrounding the issue of a single-payer system will only get more frenzied as 2020 approaches. Business reporters can help clear the air now by answering one or more of the following questions for their readers:

Who qualifies for “Medicare for All”?

Everyone.  Develop a Q&A with your readers and start with this question; their answers will likely provide a story and video that gets widely viewed and read by many other subscribers in your circulation area. With the exception of the Veterans Health Administration and Indian Health Service, every American who receives health care services through government-sponsored programs such as Medicare, Medicaid, or the Children’s Health Insurance Program, or through an employer or private insurer, would be covered under “Medicare for All.” The national program also would cover those who are uninsured.Factcheck.org at the Annenberg Public Policy Center offers this backgrounder. 

Why is “Medicare for All” being proposed?

Money. “Medicare for All” could reduce total health care spending in the United States by nearly 10%, researchers at the Political Economic Research Institute (PERI) at the University of Massachusetts Amherst found in a November 2018 study. The U.S. spends twice as much on health care as other developed countries,reportsthe Committee for a Responsible Federal Budget (CRFB), a Washington, D.C.-based policy group. In 2017, total health care expenditures cost Americans $3.5 trillion. That’s 18% of our national budget. The federal government paid about half those costs in 2017, spending $1.5 trillion, and costs are escalating. By 2028, the Office of Management and Budget in the Congressional Budget Office estimates that Washington’s share of health care bills will nearly double, to $2.8 trillion.

What challenges does “Medicare for All” face?

Plenty.The legislation’s main opponents are private insurance companies, which would be eliminated, and hospitals, which would have their payments cut. Both profit under the current system. Private insurers pay hospitals substantially more than Medicare (40%) for the same services, but hospitals could lose 16% of revenues, or $151 million annually, said Dr. Kevin Schulman, a professor of medicine at Stanford University, and one of the authors of a recent study published in the Journal of American Medical Association (JAMA). Talk with your local hospital about the impact that the proposed single-payer system would have on their ability to deliver quality health care.

The Rising Cost of Long-Term Care

Today’s middle-income Americans won’t be able to afford tomorrow’s long-term care.

New studies and research from both private and public sources paint the same harsh picture: By 2029, the numbers of middle-income seniors needing long-term care will double to 14.4 million. By then, long-term care costs will also escalate, according to projections recently released in Genworth’s 15th annual study. From 2017-2018, costs in all long-term care categories increased above the 2.1% rate of inflation, at an average of 3 percent, the financial company found. But costs in some care categories (a semi-private room in a nursing home, or in an assisted living facility), increased to 4 percent and 7 percent, respectively–two and three times the rate of inflation.

Business reporters can deliver a series of enterprise stories that will get the conversation going among their readers by looking into one or more of the questions raised by this public health care crisis:

Why is there a long-term care crisis?

Longevity is increasing, and with come the increasing numbers of middle-income seniors who will need support services. Approximately 60 percent will need a cane, walker, or wheelchair to remain mobile, and 20 percent will need help with bathing, eating, and dressing, according to The U.S. Health and Retirement Study, an ongoing study conducted by the National Institute on Aging and the Social Security Administration.  Assemble a panel of a cross-section of readers and ask them the uncomfortable question no one wants to ask: How are they planning for their future long-term care needs? Include a health care expert in your discussion, such as Tricia Neuman, director of the Kaiser Family Foundation’s Medicare policy program.

What public policy solutions are there?

Very few, in the United States. Many Western democracies provide their citizens with long-term care, but in the United States, long-term care support services are limited to low-income seniors who qualify for Medicaid. Seniors with annual assets of $25,000 to $74,000 are “The Forgotten Middle,” says Health Affairs, a public policy journal, and they lack the resources necessary for housing and health care they need.  Howard Gleckman, a member of the Long-Term Financing Collaborative, is a good source to interview on this issue.

Do your readers have a plan for their future health care needs? By the time seven in every 10 seniors reach the age of 65, they will need some type of long-term care, according to the U.S. Department of Health and Human Services. Yet sales of long-term policies are dropping, and currently, only 15 companies offer policies, which get more expensive with the policyholder’s age. Some financial experts advise clients to earmark money for long-term care separately in planning their retirement budgets. What plans have your readers made for their future health needs?