A look at Cadillac’s first electric car, promising a range greater than 300 miles


  • Cadillac Lyriq is the brand’s first pure electric
  • Crossover EV promises a range greater than 300 miles
  • Rear- or all-wheel drive configurations
  • Start of production still two years away
  • May cost as much as the $80,000 Tesla Model X

Cadillac revealed its first pure electric entry, the 2023 Cadillac Lyriq, which goes into production in late 2022. The luxury crossover SUV boasts advanced styling, though the body shape is more traditional hatchback than the sloping coupe-inspired 4-door look.

The Cadilac Lyriq


Cadillac

Cadillac Lyriq pricing

We expect the Cadillac Lyriq to cost around $80,000, which would put it directly up against the crossover EV Tesla
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Model X. Cadillac’s design, offering a performance all-wheel drive version and a range of 300-plus miles, mimics the specs of the AWD-only dual-motor Model X, which offers 351 miles of range in long-range plus configuration and 305 miles in its performance variant.

New design approach

The 2023 Lyriq introduces a new look to Cadillac with more horizontal elements in the nose, moving away from the shield-like grilles of its conventional models. The Cadillac badge takes a prominent position beneath a slim slit that runs the width of the front deck. The division retains its vertical LED lighting elements, which form the outboard edge of triangular inlets. Lower inlets also manage airflow into the vehicle and around the battery pack.

You might like: The Ariya is Nissan’s new electric crossover SUV, and it will have some semiautonomous tech

Even with the electric vehicle underpinnings, the Lyriq sports traditional proportions. The profile features a long hood, wheels pushed out to the corners, and a large glass area that ends in a C-pillar mounted rear-liftgate.

Inside, the Cadillac Lyriq boasts a 33-inch wide LED screen incorporating the digital instrument cluster and infotainment center. Lyriq also incorporates a two-plane reality-enhanced head-up display. The near element shows speed, and other information, and the far plane displays navigation signals and other alerts.

Cadillac Lyriq showcases SuperCruise, noise cancellation

The Lyriq will employ new noise cancellation technology and enhanced audio with AKG, which will feature a 19-speaker system. Also available on the EV is advanced SuperCruise, Cadillac’s hands-free driver-assist with automated lane change. A remote feature parks the vehicle either in a parallel or perpendicular space with the driver inside or nearby.

New platform with Ultium batteries

The Lyriq represents the first vehicle in what Cadillac says will be a portfolio of EVs from GM’s
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luxury brand. This new EV will offer rear-drive as well as a performance version with all-wheel drive. The Cadillac Lyriq rides on a new, dedicated EV platform that incorporates GM’s Ultium battery pack into the floor structure. Those cells use nickel-cobalt-manganese-aluminum chemistry. The aluminum content is said to reduce the use of rarer cobalt by as much as 70%.

Also see: 8 new luxury SUVs for under $50,000

Cadillac promises fast-charge capability for Lyriq. Using DC current, the Lyriq can recharge at rates exceeding 150 kW, allowing for a full charge in less than an hour.

When and where will the Cadillac Lyriq be built?

Don’t look for the Cadillac Lyriq at dealerships anytime soon. The division said production begins in late 2022. The vehicle will also be built in China first for that market, with a second, yet-to-be-named production facility in the U.S.

Also see: These 3 EVs are the lowest cost to own over 5 years



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Life will never be the same for people over 60 — even with a COVID-19 vaccine


Imagine this scenario, perhaps a year or two in the future: An effective COVID-19 vaccine is routinely available, and the world is moving forward. Life, however, will likely never be the same — particularly for people over 60.

That is the conclusion of geriatric medical doctors, aging experts, futurists and industry specialists. Experts say that in the aftermath of the pandemic, nearly everything will change, from the way older people receive health care to how they travel and shop. Also overturned: their work life and relationships with one another.

“In the past few months, the entire world has had a near-death experience,” said Ken Dychtwald, CEO of Age Wave, a think tank on aging around the world. “We’ve been forced to stop and think: I could die, or someone I love could die. When those events happen, people think about what matters and what they will do differently.”

Older adults are uniquely vulnerable because their immune systems tend to deteriorate with age, making it so much harder for them to battle not just COVID-19 but all infectious diseases. They are also more likely to suffer other health conditions, like heart and respiratory diseases, that make it tougher to fight or recover from illness.

Read: Yes, you may still be able to retire one day

So it’s no surprise that even in the future, when a COVID-19 vaccine is widely available — and widely used — most older adults will be taking additional precautions.

“Before COVID-19, baby boomers — those born after 1945 but before 1965 — felt reassured that with all the benefits of modern medicine, they could live for years and years,” said Dr. Mehrdad Ayati, who teaches geriatric medicine at Stanford University School of Medicine and advises the U.S. Senate Special Committee on Aging. “What we never calculated was that a pandemic could totally change the dialogue.”

It has. Here’s a preview of post-vaccine life for older Americans:

Medical care
  • Time to learn all about online health care. Only 62% of people over 75 use the internet — and fewer than 28% are comfortable with social media, according to data from the Pew Research Center. “That’s lethal in the modern age of health care,” Dychtwald said. So, there will be a drumbeat to make them fluent users of online health care.



  • 1 in 3 visits will be telemedicine. Dr. Ronan Factora, a geriatrician at Cleveland Clinic, said he saw no patients age 60 and up via telemedicine before the pandemic. He predicted that by the time a COVID-19 vaccine is available, at least a third of those visits will be virtual. “It will become a significant part of my practice,” he said. Older patients likely will see their doctors more often than once a year for a checkup and benefit from improved overall health care, he said.
  • Many doctors instead of just one. More regular remote care will be bolstered by a team of doctors, said Dr. Greg Poland, professor of medicine and infectious diseases at the Mayo Clinic. The team model “allows me to see more patients more efficiently,” he said. “If everyone has to come to the office and wait for the nurse to bring them in from the waiting room, well, that’s an inherent drag on my productivity.”
  • Drugstores will do more vaccinations. To avoid the germs in doctors’ offices, older patients will prefer to go to drugstores for regular vaccinations such as flu shots, Factora said.
  • Your plumbing will be your doctor. In the not-too-distant future — perhaps just a few years from now — older Americans will have special devices at home to regularly analyze urine and fecal samples, Dychtwald said, letting them avoid the doctor’s office.
Travel
  • Punch up the Google
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    Maps.
     Many trips of 800 miles or less will likely become road trips instead of flights, said Ed Perkins, a syndicated travel columnist for The Chicago Tribune. Perkins, who is 90, said that’s certainly what he plans to do — even after there’s a vaccine.

  • Regional and local travel will replace foreign travel. Dychtwald, who is 70, said he will be much less inclined to travel abroad. For example, he said, onetime plans with his wife to visit India are now unlikely, even if a good vaccine is available, because they want to avoid large concentrations of people. That said, each year only 25% of people 65 and up travel outside the U.S., vs. 45% of the general population, according to a survey by Visa
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    . The most popular trip for older adults: visiting grandchildren.

  • Demand for business class will grow. When older travelers who are financially able choose to fly, they will more frequently book roomy business-class seats because they won’t want to sit too close to other passengers, Factora said.
  • Buying three seats for two. Older couples who fly together — and have the money — will pay for all three seats on a flight so no one is between them, Perkins said.
  • Hotels will market medical care. Medical capability will be built into more travel options, Dychtwald said. For example, some hotels will advertise a doctor on-site or one close by. “The era is over of being removed from health care and feeling comfortable,” Dychtwald said.
  • Disinfecting will be a sales pitch. Expect a rich combination of health and safety “theater” — particularly on cruises that host many older travelers. Perkins said: “Employees will be wandering around with disinfecting fogs and wiping everything ten times.”
  • Cruises will require proof of vaccination. Passengers — as well as cruise employees — will likely have to prove they’ve been vaccinated before traveling, Factora said.
Eating
  • Local eateries will gain trust. Neighborhood and small-market restaurants will draw loyal customers — mainly because they know and trust the owners, said Christopher Muller, a hospitality professor at Boston University.
  • Safety will be a restaurant’s bragging point. To appeal to older diners in particular, restaurants will prominently display safety-inspection signage and visibly signal their cleanliness standards, Muller said. They will even hire employees exclusively to wipe down tables, chairs and all high-touch points — and these employees will be easy to identify and very visible.
Home life and shopping
  • The homecoming. Because of so many COVID-19 deaths in nursing homes, more older adults will leave assisted living facilities and nursing homes to move in with their families, Factora said. “Families will generally move closer together,” he said.
  • The fortress. Home delivery of almost everything will become the norm for older Americans, and in-person shopping will become much less common, Factora said.
  • An increase in grocery deliveries. The 60-and-up workforce increasingly will be reluctant to work anywhere but from home and will be very slow to re-embrace grocery shopping. “Instacart delivery will become the new normal for them,” Dychtwald said.

Also see: Social Security could be vulnerable under President Trump’s plan for payroll taxes

Gatherings
  • Forced social distancing. Whenever or wherever large families gather, people exhibiting COVID-like symptoms may not be welcomed under any circumstances, Ayati said.
  • Older adults will disengage, at a cost. Depression will skyrocket among older people who isolate from family get-togethers and large gatherings, Ayati said. “As the older population pulls back from engaging in society, this is a very bad thing.”
  • Public restrooms will be revamped. For germ avoidance, they’ll increasingly get no-touch toilets, urinals, sinks and entrances and exits. “One of the most disastrous places you can go into is a public restroom,” Poland said. “That’s about the riskiest place.”



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No student loan payments for the rest of the year — what this means for all types of college borrowers


You don’t have to make another federal student loan payment in 2020. Now is the time, though, to decide what to do before your bill arrives in January 2021.

Federal student loan borrowers were already in an automatic interest-free pause on payments as part of the original coronavirus relief bill, known as the CARES Act. This pause was expected to expire Sept. 30, but an extension of the forbearance through Dec. 31 was directed in a memorandum signed by President Donald Trump on Aug. 8.

However, it’s uncertain that all the student loan relief measures included in the original CARES Act, such as a pause on collection activities, will also continue.

“The language of the executive order is not clear,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors. It’s also possible, she says, that Congress will make additional changes before the current automatic forbearance period ends.

See: Trump’s order to extend payment freeze on some student loans leaves ‘many unanswered questions’

For now, the forbearance extension is to begin Oct. 1 and run through the end of the year, barring any legal challenge. The Department of Education is expected to issue additional guidance in the coming days on the details of the memorandum.

Here’s what the student loan payment relief extension is likely to mean for you, depending on your situation:

You have federal loans and face financial hardship

Although January 2021 is just a few months away, it’s enough time to make a change to your federal loan payments and avoid defaulting on the loans.

“There is no harm or downside in talking to your servicer now,” says Scott Buchanan, executive director of Student Loan Servicing Alliance, the trade association of student loan servicers. “You want to be well-prepared for whenever this does expire.”

If you know you’ll have difficulty repaying the debt, contact your servicer now about enrolling in an income-driven repayment, or IDR plan — it caps payments at a portion of your income and extends the repayment term. If you don’t have a job, your payment could be zero. If you’re already enrolled in IDR, make sure to recertify your income if it has changed.

You can still make payments on your federal loans

If your finances haven’t been affected by the economic downturn, you can use this time to prioritize financial goals.

Consider making payments toward the principal on your federal loans to lower your overall debt. Since your loans are on automatic forbearance, you’ll need to contact the servicer to do so.

You can also make a dent in other financial goals, such as paying down credit card debt or padding your emergency fund.

Your federal student loans are in default or rehabilitation

All collection activities on federal student loans are suspended through Sept. 30, such as wage garnishment and collection calls. However, experts say, the new memorandum doesn’t specifically indicate that collections would be suspended through the end of the year.

Similarly, if you’re currently rehabilitating defaulted student loans, the original six months of nonpayment counted toward the nine needed to complete the process. But the memorandum doesn’t specify this would continue under the forbearance extension. Contact your servicer for more information.

You’re pursuing Public Service Loan Forgiveness

Federal student loan borrowers pursuing Public Service Loan Forgiveness don’t need to make payments until Sept. 30. Those months of nonpayment still count toward the 120 payments needed to qualify for PSLF as long as you’re still working full time for an eligible employer.

Also read: The problem with Pell Grants: They’re not keeping up with the cost of college

However, there is no indication yet that the new memorandum applies to borrowers pursuing PSLF, experts say. Contact your servicer to find out if the additional months of forbearance would count toward PSLF. If not, consider making payments during this time to keep on track.

You recently graduated from college

If you were expecting to start making payments on your loan within the period of extended forbearance, your first payment won’t be due until January. Usually, interest accrues during a grace period, but if your six-month grace period overlaps with the administrative forbearance period, interest won’t grow.

Use this time to find out who your servicer is and what your first bill will look like.

If you think you can’t make your minimum payment come January, you can apply for an income-driven repayment plan to cap payments at a portion of your income (it could be zero if you don’t have a job). Apply for income-driven repayment at least two months before repayment starts.

You’re taking time off from school

Federal loans typically have a grace period of six months after you leave school. If you have student loans and last attended school in the spring, your payments would start to come due this fall. The extended forbearance period would delay your first payment until January.

Be sure to read: A gap year could haunt students financially for years—but it could be worth it

When you resume classes, you can defer payments until you finish school as long as you are enrolled at least half time. But student loans get only one grace period; you won’t have another after you graduate or leave school again.

You have private student loans

Your lender may offer private student loan relief in the form of a payment pause or reduced payments. While a number of lenders structured relief plans to end Sept. 30, many are open to an extension or additional relief.

Also see: Kamala Harris on student-loan forgiveness, Medicare, universal basic income, credit scores — and a tax on trading stocks

Contact your lender to ask about additional deferments or payment reductions. You can also apply for existing loan modification programs for financial hardship. These will vary from lender to lender — but interest will continue to accrue, unlike with federal loans.

You’ll likely have to apply for private loan relief individually since most lenders aren’t making payment pauses or loan modifications automatic, Mayotte says.

You have nongovernment owned FFEL or Perkins loans

Student loan borrowers with the Federal Family Education Loan (FFEL) Program or Federal Perkins loans not owned by the Education Department don’t have access to the automatic forbearance.

To take advantage of the forbearance, you’ll need to combine your loans into a federal direct consolidation loan. Consolidating loans will cause any unpaid interest to capitalize, or be added to the principal balance. Contact your loan servicer to determine how consolidation will affect the total repayment amount, interest rate and loan balance.

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A ‘lifequake’ can shatter your reality—how to navigate the twists and turns of major change


Life transitions can be jarring at any age, but they often pile on top of each other in your 50s and 60s. Transitioning to retirement…to empty-nesterhood…perhaps to a single life…living through a health trauma. Heck, it’s partly why our site is called Next Avenue. Bruce Feiler, author of the excellent new book, “Life Is In the Transitions: Mastering Change at Any Age,” knows all about it.

Feiler, 55, a brilliant storyteller (“Walking the Bible,” “The Council of Dads”) interviewed 225 people of all ages to learn about the transitions they experienced and are experiencing. The new book’s title comes from the phrase William James, the founder of modern psychology, coined a century and a half ago.

Life is in the transitions: two types

“Life Is in the Transitions” is flying off bookshelves (“it had four printings in 10 days,” Feiler told me) and I think is worth reading, especially for people in midlife or beyond. I recently interviewed Feiler about transitions — which he says are sometimes disrupters and sometimes “lifequakes” — and how to manage them and thrive from them. Highlights:

Next Avenue: You write that the idea for the book came partly out of your father, who had Parkinson’s, going on what you call a ‘suicide spree.’ What happened and how did that lead to the book?

Bruce Feiler: At its simplest, this is a book about lifequakes; those periods when life is coming at you from all directions and I went through a lifequake.

I had this back-to-back-to-back set of disruptive life experiences: cancer at 43 as a new dad; I almost went bankrupt and then my dad tried to take his own life six times within 12 weeks.


“Linear life is dead; the idea that we’re going to have one job, one relationship, one home, one spirituality, one source of happiness — that’s gone,”


— Bruce Feiler, author of ‘Life Is In the Transitions’

I’m ‘the story guy’ so I started sending my father questions about his life and it worked [ending his suicide attempts]. I began to realize that going through a life transition was fundamentally a narrative experience. Life transitions are the times in our lives when we don’t know how to tell the stories of our lives anymore.

I started telling my story of my dad to people and everyone had a similar story: ‘My wife had a headache and went to the hospital and died;’ ‘My boss stole money from me…” There wasn’t a book on how to get through a period like this asking the questions I wanted to ask, so I thought: ‘Let me go talk to people and get others’ life stories and see how they talked themselves through difficult times to help me get through my difficult time.’

Also read: These boomers just made massive retirement mistakes — don’t be one of them

It became pretty clear everybody had defining life transitions. Then I’d ask people: What worked and what didn’t work? I realized certain patterns kept appearing.

Disrupters and lifequakes

Can you explain the difference between transitions that are ‘disrupters’ and ones that are ‘lifequakes?’

The number of changes we go through in life is quickening; the pace we’re going through them is faster and our breadth of life experiencing them is wider. The basic unit of change is a disrupter, because it’s value neutral: some disrupters are negative and some are positive. You can be becoming an empty-nester or getting married or getting sober or retiring. You can also be getting a diagnosis or losing a job in the pandemic.

We go through three dozen life transitions in our lives; one every 12 to 18 months. That’s more often than most people see a dentist.

But every now and then, disrupters rise to the level of a lifequake — a massive source of change that lasts for years. That’s what we’re all in now [with the coronavirus pandemic]; a collective lifequake.

Lifequakes tend to clump up; I call this the pileup phenomenon. Just when you lose your job, you wreck your car and you’re going to move and your mother-in-law needs cataract surgery.

Why are the number of disrupters quickening and faster?

A hundred years ago, most people had to live where their parents wanted them to live and do what their parents wanted them to do. We believed that’s what we wanted. We have a lot more freedom now. Now you can move at retirement or start a new venture or go from working to giving back or volunteering. We have many more choices and opportunities.

Life transitions of people in their 50s and 60s

You interviewed people of all ages, but I’d like to focus on ones in their 50s and 60s.

In general, the skills for navigating transitions for people 50-plus are the same as for people 50-minus.

You found that for people in their 50s and 60s, their most common low point was between age 45 and 49. Why was that?

A lot of things come at you at that time of life: financial pressures, aging parents.

Do people over 50 — boomers and some Gen Xers — deal with transitions the way people under 50 do?

A big idea of the book is that a linear life is dead; the idea that we’re going to have one job, one relationship, one home, one spirituality, one source of happiness — that’s gone. It’s been replaced by a nonlinear life with many more twists and turns and transitions. Gen Xers understand that more intuitively than do boomers and millennials understand it more than Xers.

So, people in their 50s and 60s are surprised to discover the pace of change is quickening. They’re more resistant to it than millennials. It’s the transition gap.

See: There’s only one generation in U.S. history that’s considered to be more unlucky than the ‘Lost Generation’

We 50-plus people were told the only permissible crisis was a midlife crisis. Our children don’t believe that. They live in a world of disruption and they’re fine with it. It’s a learned skill for the parents.

The 3 phases of transitions

Are people over 50 generally good at navigating transitions, based on your research?

There are three phases of transitions: The Long Goodbye, The Messy Middle and The New Beginning.

The Long Goodbye is where you say goodbye to a life that is not coming back. You’re no longer going to have this job or your legs or have children in your house. You have to say goodbye. People tend to skip over this phase. It’s the hardest phase of the pandemic: we spent months thinking we were going back [to life before the pandemic]; we’re not going back and you need to mourn that.

The Messy Middle is when you are shedding certain habits and mind-sets and creating new ones.

The New Beginning is when you are unveiling your new self. It’s time to update your story and tell other people.

I’m telling you these phases in an order. You don’t have to do them in that order, but you do have to do all three.

I don’t think the 50-plus cohort is instinctually less good at them.

Be sure to read: 4 million older workers will be pushed out of the workforce by October

What does happen later in life, and I’m speculating, is there’s a higher degree of likelihood you’re going to have a pileup. The stage of life in your 60s and 70s when you’re dealing with medical issues and moves and empty nestings — these are the pileup years.

Is having three disrupters at once three times harder than just having one?

There are pros and cons.

The disadvantage is that they’re coming at you from all directions and you kind of have to prioritize them. I can’t think about moving now; I have to pay the bills. Or I can’t worry about not being happy in my job, I have to make sure I get my dialysis.

The positive side is that it breaks down your resistance much more quickly.

What’s good about going through life transitions?

When you know ‘I’m going to enter a transition,’ that gives you an incredible sense of agency and that’s very fulfilling. It doesn’t mean it’s going to get easier.

If you’re in a pileup — you’re an empty-nester and you lost your job and decided you’ve got to move — once you start purging and imagining the new place, it’s much easier to be in the transition than wallowing with the fear of ‘Do I want to be in it?’

Do transitions relate to finding meaning and purpose in life?

They do. Transitions involve rebalancing the source of meaning in our lives. We navigate through the ABCs of meaning: A is Agency—what you do and what you make; B is Belonging — that’s relationships; family and neighbors, colleagues and C is your Cause that’s higher than yourself.

Also see: Are you facing early retirement? Here’s how to prepare

When people say: ‘I want a more meaningful life’ they’re maybe saying: ‘I’m working too hard and I want to focus on my family’ or ‘I’m now an empty-nester and I want to give back.’ We reweight the ABCs of meaning.

Tools for navigating life disrupters and lifequakes

You have seven tools for navigating life disrupters and lifequakes. The first is Accept It. What do you mean and how do you do it?

Going through a lifequake is an emotional experience, but not necessarily the emotions you might expect. The number one emotion people said was fear, number two was sadness and number three was shame. I wouldn’t have put shame on the list.

So how do you get beyond it? Some people write their feelings down. That can be very powerful. Eighty percent of people use rituals — burying something in the ground, getting a tattoo, putting a memento on a shelf.

Another tool is Shed It. What does that mean and how do you do it?

Once you’re in The Messy Middle, you’re not going back. You have to groom for the new and shed habits. You now have less money, so you need to go out to eat less. Or you’re trying to lose weight, so you shed your habit of opening the refrigerator every hour looking for something to eat.

It makes room for astonishing creativity. I was surprised by people who started to dance or play the ukulele or cook or paint poetry.

Some of these are ‘new things I always wanted to’ fill the blank: play tennis, bake, sing opera. A lot are archaeology: going back to your childhood. ‘I wish I didn’t stop playing piano,’ but I was busy and working and I had family obligations.

Some of the creative exercises are new and some are digging from the back of the closet.

Your last tool is: Tell It: Compose a Fresh Story. What do you mean?

If you want the transition to end, let’s end the story by writing an ending that has an upbeat ending. Add a new chapter to your life story where something constructive comes out of the transition, even a difficult time. You can finally close that chapter. You control the story.

What is your advice specifically for people to help them best manage transitions they’re going through or might go through in the future?

You can get through it.



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Are you facing early retirement? Here’s how to prepare


The coronavirus pandemic is causing many older workers who’ve lost jobs or been offered early retirement severance packages to decide to pack it in.

But taking early retirement can throw a monkey wrench into your future financial security. That’s why it’s vital to be cautious before doing it. I’ve talked to several sharp financial advisers for their tips on how best to prepare to retire earlier than you planned; you’ll see their suggestions below.

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

“The numbers suggest that while many older workers displaced by COVID-19 job loss are still seeking work, a large number have dropped out of the labor market entirely,” Jennifer Schramm, a senior strategic policy adviser at the AARP Public Policy Institute wrote in her blog: “Devastating Job Losses May Be Pushing Older Workers Into Retirement.” As a result, Schramm said, “job losses associated with the pandemic may be leading to a substantial rise in earlier-than-planned retirement.”

Frankly, as someone who writes about work and money for people over 50, I’m worried that frustration with the job search or eagerness to grab early-out offers are triggering people to retire early, with potential financial reverberations for the rest of their lives.

The risk of claiming Social Security early

Take Social Security — or rather, maybe don’t.

Due to the heightened unemployment of the 2007-09 recession, “the take-up of Social Security at age 62 jumped from 42.2% in 2007 to 46.9% in 2009,” Alicia H. Munnell, director of the Center for Retirement Research at Boston College, wrote on MarketWatch. And, she added, “I would expect this pattern to repeat itself in the wake of COVID-19.”

Here’s why that’s a concern: Starting to claim Social Security at 62 because you aren’t working will then lock you into a level of much smaller benefits than if you’d waited until later.  “Benefits claimed at 70 are 77% higher than those claimed at 62,” Munnell wrote.

“If you qualify for the maximum amount of Social Security and take your benefits at the youngest allowed age, you will receive $2,252 each month,” says Michelle Connell, a Chartered Financial Analyst and owner of Portia Capital Management in Dallas. “If you wait until you are 70, you will receive $3,980 a month.”

Those enticing early retirement offers

Undoubtedly, it can be enticing when your employer dangles an early-retirement package compelling enough to grab it and not look back.

A growing number of companies from airlines to media firms have been making these offers due to the pandemic. According to CNBC, nearly 4,000 Southwest Airlines
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workers and 2,235 Delta
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pilots signed up for buyouts. Delta offered partial pay for up to three years plus extended health insurance coverage.

A spokesman for the Air Line Pilots Association told CNBC: “The voluntary early-out program participation exceeded our expectations.”

Such offers might not come around again anytime soon and there is no guarantee your job will be safe.

Don’t expect your company to follow it with another severance package for future rounds of layoffs, notes Connell.

It’s logical to me that older workers, especially those in spitting distance of age 65, would decide to bid employment adieu. Medicare kicks in at 65 and full Social Security benefit eligibility starts at 66 or 67.

See: Take Social Security at 62? Here’s when it makes sense to do it

Whatever the impetus, the decision to retire is often emotional and fraught with myriad calculations. It’s generally not a solo decision if you have a spouse or partner or minor children.

Money advice for the early retirement decision

Here’s how to help shape a financial framework if you’re contemplating early retirement:

Prepare a budget. Retiring early “can be a difficult decision, since there are so many unknowns to consider,” says Charles Adi, a Certified Financial Planner at the advisory firm Blueprint 360 in Houston. “I encourage my clients to take some time and evaluate the three critical retirement planning areas: income, expenses and insurance.”

First, determine your monthly income and spending needs in retirement.

“Be careful not to underestimate your discretionary budget for travel, shopping, eating out and spoiling the grandkids,” Adi says. “You will be surprised how quickly small purchases add up.”

Ask yourself this key question: Will there be areas you can cut back expenditures, say, by moving to a smaller home or town where the cost of living is cheaper?

See: There is more to picking a place to retire than low taxes — avoid these 5 expensive mistakes

Websites like Mint.com and YouNeedABudget.com offer free software to track spending and set up budgets.

If you’re offered an early retirement package, really scrutinize it. Buyouts are often complicated and not cookie-cutter. Most are negotiable to some extent, too.

You have to truly understand what the deal is that’s being offered, says Dennis Notchick, a Certified Financial Planner for Stratos Wealth Advisors in San Diego. That goes beyond how much money you’ll receive, which is often related to your tenure with your employer.

“Is it a lump sum? Is there an annuity option, lifetime income payments?” Notchick says. A lump-sum buyout can balloon your income for the year which can result in a significant tax bill. If you can take the payments in stages, that could lower your IRS bill.

If you are married, you’ll want to pay special attention to the payout rules.

“Sometimes a person will take a lifetime income payment, but if they die, their spouse gets nothing. Sometimes a survivorship benefit of fifty percent or two-thirds is an option,” says Notchick.

To immunize yourself against future tax rate hikes due to federal deficit spending, Notchick says, you may want to use some of your early retirement money to open a tax-sheltered Roth IRA.

Be sure to review any medical coverage, too. A typical offer includes one year of health coverage.

Access to an employer health plan might be something you can negotiate for an extended period of coverage.

When job-based plan coverage ends (and you’re not yet eligible for Medicare), you can usually continue enrollment for up to 18 months — sometimes longer — under a federal law known as COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act. It requires firms with at least 20 employees to offer this option.

Normally, you have up to 60 days to elect COBRA and another 45 days to pay the first premium (covering the period dating back to your coverage loss). But if you’ve been laid off or furloughed due to the pandemic, a recent federal rule gives you more time to decide about COBRA.

The date to elect COBRA now begins March 1 (the end of the COVID-19 “outbreak period”) and will end 60 days after whenever the government ultimately declares the COVID-19 emergency over. So, according to NPR, if you were laid off in April and the COVID-19 emergency ends Aug. 31, you’d have 60 days beginning Aug. 31 — the end of October — and then the regular 60-day COBRA election period after that.

See: 5 things to know about health care in retirement

So, people laid off because of the coronavirus outbreak have at least four months, maybe more, to decide whether they want to elect COBRA.

The drawback: COBRA premiums are steep. Figure on something like $600 a month per person or more.

“Finally,” Notchick says, “is long term care of concern? Are you currently covered by a long-term care policy at work? If so, can you keep it when you retire? And is it worth keeping?”

Determine your retirement income sources. Carefully review your anticipated income (Social Security benefits, pensions, distributions from personal investments and savings) and expenses (weekly, monthly and yearly budgets).

Many major mutual-fund companies have retirement calculators on their sites that can help you with this exercise.

“Focus first on guaranteed sources, such as Social Security and pensions. Then calculate your monthly cash needs from investments,” Adi says. “If you are fortunate to have a pension, evaluate your payout options and determine if your pension payment adjusts for inflation annually.”

The Social Security Administration website can let you get an estimate of your future Social Security benefits and a record of your lifetime earnings history.

If you’re married, you’ll need to determine when it’s best for each of you to start claiming Social Security. “Do you need to trigger both you and your spouse’s Social Security policies when you retire?” Notchick asks. “Can you take one or both later and let it increase?”

The AARP website has a useful Social Security benefits calculator.

Plan your withdrawals from savings and investments. A conservative annual drawdown of retirement savings may be to take 3% the first year, and to adjust for inflation after that.

If you’ve been fortunate enough to have saved $1 million, for example, plan to withdraw $30,000 in the first year and to increase that amount by the rate of inflation in the second year and beyond.

Some financial advisers stick with the 4% rule for retirement withdrawals.

“Evaluate your annual expenses and multiply this by 25,” Connell says. “This will give you the amount of money you must have order to qualify for standard 4% withdrawal rate and not run out of money.”

If you’re not taking an early retirement offer with health coverage and are thinking of retiring before 65, be sure to take health insurance into account. You won’t yet be eligible for Medicare, so health insurance will be a huge consideration.

Also on MarketWatch: Where should I retire?

If you have a spouse who is still working, you may be able to tap into health coverage via his or her employer. Otherwise, look into Affordable Care Act options through healthcare.gov or your state’s marketplace.

At 59, I currently shell out around $800 a month for a health insurance plan that has a high annual deductible: $7,500.

Talk to a financial adviser. An expert can help you work through your early retirement puzzle. I recommend working with a fee-only financial adviser, rather than one who charges commissions. And look for one who is a fiduciary — which means this pro puts your interests first.

Some databases to search for a certified financial planner: the nonprofit Certified Financial Planner Board of Standards, the National Association of Personal Financial Advisors, the Financial Planning Association and Wealthramp.com.



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