Author: Vawn Himmelsbach

A new development of 11 three-story detached townhomes in Houston holds the promise of energy self-sufficiency in a city where power can be unreliable. Each three-bedroom home is equipped with Tesla solar roofs and batteries.

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It’s the first of its kind in the U.S. — and the builder is promising that “if the power ever goes out in Houston, for whatever reason, they’ve got you covered,” according to KHOU 11 reporter Ron Treviño.

Texas is the only state that isn’t part of the national power grid. Rather, it has its own power grid — but that means, if anything goes wrong, it can’t draw on power from elsewhere.

Couple this with an aging infrastructure and a propensity to be hit with severe weather events, and this leads to frequent blackouts that last days or longer. In fact, Texas experienced 210 weather-related outages between 2000 and 2023 — more than any other state, according to Climate Central.

“Because our power grid is so terrible and we lose power for days on end, we have people that have lost all their groceries,” Jaime Fallon, director of sales with NextGen Real Estate, told KHOU 11.

How solar homes are tackling power outages

The Oaks of Shady Acres offers energy self-sufficiency with Tesla solar shingles. These solar shingles work with Tesla’s Powerwall home battery storage to make the homes self-sufficient. The homes also come with electric vehicle chargers.

“Residents benefit from free, clean energy while also profiting from surplus power sold back to the grid,” said a sponsored article about the project.

As of late last month, five homes were still up for sale. Fallon claims that although the builder, Utopia Homes, is using Tesla technology, the backlash against Tesla CEO Elon Musk is not hurting demand. Utopia is a subsidiary of Goldman Investments, which calls Tesla a partner on its website.

“We have honestly had no issues with Trump and Musk backlash. In fact, I had over 150-plus people at my brokers’ open. It was insane, people were very excited. Houston is an oil and gas place, so having the first Tesla-powered homes is unheard of,” Fallon told Realtor.com. She said buyers are mostly interested in reliable power.

“Who cares who is in office when you don’t have power? Houston has had a huge issue with electricity because we’re not on the national grid. So when we lose power, we’re out for five days,” she told Realtor.com. “While we are big on oil, gas and generators, now people are seeing that they can have Tesla-powered homes at similar price points.”

The larger homes have an asking price of $544,900 while the smaller models are priced at $524,000. This is well above Houston’s median list price of $330,600, according to Realtor.com.

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Weighing the pros and cons

If you’re looking to install a solar system at your home, a 30% federal tax credit is available, although it’s not clear this will be maintained by the current administration. Costs can vary considerably depending on where you live, the company that you choose, how much battery storage you need and other factors.

Some of the pros of a solar system? According to SolarReviews, a service that helps homeowners with the solar buying process and matches them with installers, solar energy not only helps to reduce your electricity bill — or even eliminate it or make you money in the case of a surplus — but is also low maintenance and offers energy independence. Plus, it’s environmentally friendly.

Some of the cons of solar include a high upfront cost and the potential for higher property taxes and homeowners’ insurance. SolarReviews says based on the median home value in the U.S., homeowners can expect solar panels to increase their annual property taxes by between $160 and $630, but around 30 states, including Texas, offer property tax exemptions. You can check if your state does here.

If you want Tesla solar shingles like the Oaks of Shady Acres, you’ll need to replace your entire existing roof with a Tesla solar roof, which will run you more than $100,000 even before you consider the cost of a battery. Tesla’s premium solar roofs are not for homeowners that prioritize return on investment and value for money, according to SolarReviews.

Your roof may not be suited to panels due to being blocked by shade, old, small or weak.

Customers should also research solar companies thoroughly before taking the plunge since many Americans have been victims of scams in recent years.

Energysage says the average U.S. homeowner will save about $50,000 on electricity over the lifetime of their solar panel system. SolarReviews says that most homeowners can break even on their solar investment within 10 to 12 years.

Fallon believes that solar homes will become the new standard for Texas and hopes other jurisdictions follow suit. “What legislation we have in Washington is going to dictate it,” she told Realtor.com. “But going toward clean energy is where I think the country is headed. I think there is a mindset shift happening.”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Mark was nervous about taking the leap and investing in the stock market. As a 35-year-old health-care worker, he’d never had time to learn about the market — but with a lot of money sitting in the bank, he felt it was time to get some professional help and start making his money work for him.

He started working with an advisor, who suggested — as part of a larger financial plan — that Mark put $95,000 into an S&P 500 index fund in early February.

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But then the market plummeted and by early April he’d lost about $15,000. While the market has made a slight recovery, Mark has yet to recoup his original investment. No wonder he’s anxious.

His advisor has told him to stay calm and hold on, but he’s wondering how long it could take till he breaks even, let alone sees a return.

No easy answers with a market correction

Numerous factors impact stock market returns, including overall economic conditions (e.g., GDP, unemployment rates), inflation, interest rates, market sentiment and geopolitical events. There’s no simple formula to predict when the market will fully recover. It could be days; it could be years.

While past performance may not predict future performance, Mark’s advisor pointed out some recurring themes that may be helpful in easing his mind.

Stock markets tend to go up over time as economies grow. For instance, the S&P 500 has returned about 10% per year (about 7% after inflation) since its inception in 1957.

This doesn’t mean the market won’t experience volatility along the way. For example, in 2024, the S&P 500’s worst sell-off was 8.45%, its biggest rally was 31.54% and it ended the year up 25.71%. Also, declines of 10% or more are common, occurring in more than 47% of the calendar years from 1980 through 2024.

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Between the Second World War and 2020, there were 26 market corrections of 10% or more from a recent 52-week high close, according to a Goldman Sachs analysis.

The average decline in these bear markets was 13.7% over four months. It took an average four months to recover the losses. In 12 of the 26 corrections, it took an average 24 months to recover.

There have already been two bear markets in the 2020s — outside the period studied by Goldman Sachs.

The first, which followed a market peak in December 2019, took only four months to recover from the March 2020 trough. The second, driven by the war in Ukraine, supply chain disruptions and rising inflation, took six months to recover from its September 2022 trough.

How long this current correction will take to recover is uncertain; it could progress into a bear market or it could recover quickly.

However, it’s being driven by erratic policy decisions. If these continue to recur, they’ll maintain a high degree of uncertainty — which is bad for markets — and could harm the underlying economic fundamentals.

This correction also appears somewhat atypical, as usually equity market sell-offs are “risk-off” trades where investors move into less risky assets such as Treasurys. This time, long-dated Treasury prices and the U.S. dollar have fallen as well.

Dealing with a market sell-off

What should Mark do to deal with this uncertainty?

It can be tempting to get out when markets are falling. After all, the prospect of continued losses is daunting — but research shows that time spent out of the market can be costly.

Missing just the five best days for the S&P 500 from Jan. 1, 1988 to Dec. 31, 2024 might mean missing out on the potential 37% gains that some of those who stayed invested in the market enjoyed over that period.

In early April, the S&P 500 lost 12% over four days — a move some might see as a sign to exit the market.

Right after, the market leapt 9.52% to notch its third biggest single-day gain in the post-WWII period. If Mark missed this day, he would have missed a chance to recoup a substantial portion of his losses.

To take advantage of this market sell-off, Mark might consider putting more money into the market by dollar-cost averaging.

This means he’ll buy the same dollar amount of units of the S&P index fund at regular periods, such as every month, regardless of the price of the index fund. In this way, he’ll buy more units when the fund is cheaper and fewer when it’s more expensive.

Since his S&P 500 index fund is part of a larger portfolio, he should also reconsider rebalancing. For instance, if his portfolio was invested 80% in equities and 20% in fixed income, he might want to sell fixed income to buy equities to ensure this weighting is maintained.

Luckily, Mark is a few decades away from retirement and he won’t realize any losses until he sells, so he has time to weather a long bear market to see it through to recovery.

But he’ll want to make sure his investments are invested appropriately for his goals, age and risk tolerance — and maybe not check on them daily.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

One Ohio couple was nearly tricked out of $17,000 — before a Chase Bank manager in Westlake stepped in and foiled the scammer’s plan.

The bank manager became suspicious and alerted police when the couple tried to withdraw the cash to pay for what they thought was a warrant from the Cuyahoga County Sheriff’s Office.

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“The customers did figure out they were going to be scammed if they took this money out and bought gift cards or put it into a crypto ATM,” Captain Jerry Vogel of the Westlake Police Department told News 5 Cleveland in a story published March 28.

It seems this type of scam isn’t a rare occurrence. The local broadcaster reports two other instances of fraud involving cryptocurrency machines have occurred recently in Westlake. Victims in those cases lost more than $25,000.

Here’s what happened, along with steps to protect yourself from being victimized.

How local residents are getting scammed

In one incident, the scammer posed as a Microsoft customer support representative after the victim called a phone number she found while doing a Google search. This is referred to as “search engine poisoning,” where cybercriminals manipulate search engine results so a malicious website (which looks legitimate) appears on the page.

Vogel says the victim was tricked into giving the fake employee access to her computer and was scared into thinking she had visited illegal websites that were trying to steal her money. She was instructed to withdraw $40,000 from her bank and deposit it into a gas station Bitcoin ATM to protect her funds. An attendant at the gas station took notice and warned her it was a scam, according to News 5, but not before she lost $20,000.

In another incident, police say the victim got a call from what he thought was the Social Security Administration directing him to deposit $5,500 in a Bitcoin ATM at a convenience store. In the wake of the scam, the owner of the shop told News 5 they planned to remove the machine.

“I just advise you to be very wary of anything that directs you to buy gift cards or put cash into an ATM,” Vogel said. “Especially the cryptocurrency ATMs.”

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How to protect yourself from financial scams

Fraud losses involving Bitcoin ATMs topped $65 million in the first half of 2024, according to a report from the Federal Trade Commission. Consumers over the age of 60 were “three times as likely as younger adults to report losing money to Bitcoin ATM scams.” The median loss across all age groups was $10,000.

When it comes to financial scams, there are usually some red flags. They often start with an unsolicited call, email, text or social media message asking for money or personal information (such as bank account details or passwords).

Scammers also use high-pressure tactics to create a sense of urgency designed to make you panic — such as impersonating the authorities or claiming you have a virus on your computer. This is followed by a request for money, commonly through unconventional methods like gift cards, prepaid credit cards, a wire transfer or cryptocurrency. If you’re panicked enough, you may not stop to consider the validity of this request.

“If someone’s calling you out of the blue demanding money, threatening you, and it has to do with Bitcoin, it’s going to be a scam,” cybersecurity expert Alex Hamerstone told News 5.

For example, “the police don’t generally call you and tell you they want to arrest you, right? They come to the door,” he said. As for the IRS, “they’ll never take your tax payment using gift cards.”

If you get a call or email from someone claiming to work for an institution, such as your bank or the police department, and they ask for personal information or a sum of money, don’t take action. Instead, call them up yourself to confirm their story and verify a real employee tried to contact you.

You can learn more about common scams on the Consumer Financial Protection Bureau website or report a scam to the Federal Trade Commission.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

What happens when your tenants are driving you to financial ruin, but you can’t kick them out during an ongoing eviction battle?

That’s the problem faced by property owner Akosua Danquah in Iowa Colony, Texas. Her tenants stopped paying rent and called the police when she tried to check on her home. Though she’s trying to get them evicted, the process is time-consuming — and it’s driving her toward bankruptcy.

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“I can’t even come to my home,” Danquah told KHOU-11 News. “This is the most disheartening thing you can imagine.”

An ongoing eviction battle

Danquah decided to rent out her home after accepting a job out of state. In January, her tenants stopped paying rent so she gave them a notice of eviction. But after going to her local justice of the peace court to file the eviction, she was told she’d have to wait 30 days.

Then her tenants stopped all communication with her, and when she tried to check on her home, they called the police.

Danquah has had to stay with family and friends since she couldn’t afford to pay both her mortgage and her rent out of state without the rental income from her tenants.

She wishes she had done a background check on the tenants.

“Whenever you take shortcuts when leasing a property, you’re taking chances,” Troy Cothran, treasurer for the Houston Association of Realtors, told KHOU-11 News.

“My recommendation is don’t take any shortcuts when leasing because it’s a business decision that you’re doing.”

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How landlords can protect themselves

If you’re looking to rent out your property, start by screening potential tenants. That could include a credit check, background check and/or income verification. You can also ask for references from their employer and previous landlord. If they refuse to do so, that may be a red flag.

Make sure you have a lease agreement that clearly outlines the amount due each month and what will happen if tenants don’t pay their rent on time (including grace periods and late fees). You may want to consult with a real estate lawyer to help you navigate landlord-tenant laws in your state.

You can also ask for a security deposit (due when the tenant signs the lease), which is typically equal to one or two month’s rent. Most states allow landlords to use the security deposit (or a portion of it) to cover unpaid rent, but the rules differ from state to state. This should be outlined in the lease.

If the tenant is late with their rent, reach out with a late rent notice. States have different rules around grace periods. In Texas, for example, landlords aren’t required to provide tenants with a grace period (unless they agree to do so in the lease).

If the tenant still doesn’t pay, you could follow up with a pay-or-quit notice in which you outline a specific time to pay the overdue rent — or move out. (Make sure you understand local and state laws around eviction procedures.)

If the tenant still fails to comply, you can file for eviction with your local court. If the eviction is successful, you may be able to sue for outstanding rent and associated costs.

While landlord insurance isn’t mandatory, it can help to cover financial losses if your tenant doesn’t pay their rent. However, if you have a mortgage on the property, you may be required by your lender to take out a landlord insurance policy.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Mortgage rates are climbing in response to a sell-off off in U.S. Treasury bonds, according to CNBC.

Throw in an accelerated sell-off in China and things could get much worse.

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Mortgage rates tend to track the 10-year Treasury yield, so it doesn’t bode well for mortgages if investors decide to sell U.S. Treasury bonds.

Adding to the risk is the possibility that U.S. mortgage-backed securities (MBS), 15% of which are held by foreign countries, could also be increasingly on the selling block

“If China wanted to hit us hard, they could unload Treasuries," Guy Cecala, executive chair of Inside Mortgage Finance, told CNBC. "Is that a threat? Sure it is.”

At the time of writing, President Donald Trump had imposed tariffs of 145% on Chinese goods, while China retaliated with tariffs of 125% on imported American goods.

The Chinese central bank recently made a public statement addressing its foreign-currency assets, including U.S. Treasuries. At a briefing in late April, Zou Lan, a deputy governor of the People’s Bank of China, said that the country had no plans to radically alter its foreign reserves despite recent volatility in the Treasury market.

“One single asset’s change in a single market will have a limited impact on the reserves,” he said.

China’s foreign exchange reserves were $3.24 trillion at the end of March, a 1.2% increase from the end of 2024.

Still, no one knows what future may hold. If countries like China do eventually decide to dump U.S. Treasuries and MBS in retaliation for tariffs and trade policies, how could that impact you?

Why this matters

Treasury securities are bonds issued and backed by the U.S. federal government, while mortgage-backed securities (MBS) contain pools of mortgages.

Foreign countries own $1.32 trillion of U.S. mortgage-backed securities, according to a global markets analysis from Ginnie Mae. China is one of the largest holders of agency mortgage-backed securities, along with Japan, Taiwan and Canada.

If Chinese institutions started selling off MBS — and if other countries start following suit — it could ripple through global financial markets.

Some doubt it will happen. This would “damage China’s own financial interests by devaluing its remaining holdings and destabilizing global currency markets,” Melissa Cohn, regional vice-president of William Raveis Mortgage, told Newsweek.

It’s generally thought to be in China’s best interest that the country keep its currency, the renminbi (RMB), lower than the U.S. dollar, since — as a nation dependent on exports — it wants to keep its prices competitive. Thus, by purchasing U.S. debt, China maintains the balance according to which Americans can continue to buy more Chinese products.

Still, an escalating trade war has raised uncertainty — and a sell-off isn’t off the table if China is willing to absorb losses. China had already begun selling off some of its U.S. MBS last year and there’s speculation it’s continuing to do so.

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What does this mean for US homebuyers?

MBS investors influence mortgage rates, based on what they’re willing to pay for mortgage-backed securities. Accelerating a sell-off would translate into lower prices for the bonds and, thus, higher mortgage rates for Americans, especially those with variable-rate mortgages.

“Most investors are concerned that mortgage spreads would widen in response to either China, Japan or Canada coming in with a retaliatory objective,” Eric Hagen, mortgage and specialty finance analyst at BTIG, told CNBC.

For those unlucky homeowners, even refinancing could leave them with higher payments. At any rate, refinancing would be less attractive, since rising rates could negate any potential savings. The 30-year fixed mortgage rate (as of April 17) averaged 6.83%, according to Freddie Mac.

Some buyers could also be priced out of the market. Higher mortgage rates can lead to a reduction in demand and, in turn, lower housing prices, so sellers may be tempted to stay put until the market improves.

Since higher rates lead to higher monthly payments — and a higher debt-to-income ratio for borrowers — this scenario can also lead to a tightening of lending standards. To mitigate risk, lenders may increase credit score requirements or require larger down payments.

If you’re looking to buy a home, secure a mortgage pre-approval so you have a budget to work with (though a pre-approval isn’t a guarantee). If you can get a good rate now, you may want to lock it in. If you’re a first-time homebuyer, you might be able to apply for an FHA loan, which is guaranteed by the Federal Housing Administration.

If demand stalls, sellers may want to consider lowering the asking price or offering incentives (such as covering the buyer’s closing costs) to sweeten the pot.

On the other hand, amid economic turmoil and plummeting consumer confidence, buyers and sellers may simply choose to wait it out.

In the meantime, it’s a good idea to build up your emergency fund to help cover higher costs if necessary.

What to read next

• Don’t have the cash to pay Uncle Sam in 2025? You may already be eligible for a ‘streamlined’ handshake with the IRS — here’s how it works and how it can potentially save you thousands
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• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in great wealth. How to get in now

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

President Donald Trump says he’s going to “make America’s showers great again” by easing restrictions on water flow.

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The executive order signed in April “frees Americans from excessive regulations that turned a basic household item into a bureaucratic nightmare,” according to a White House fact sheet. "No longer will showerheads be weak and worthless."

As he signed the order, Trump told reporters in the Oval Office that “ridiculous” water pressure requires him to stand in the shower for 15 minutes to get his hair wet.

The change comes down to the definition of showerhead. Showerheads manufactured since 1994 cannot discharge more than 2.5 gallons of water per minute to abide with federal laws.

In the case of showerheads with multiple nozzles, President Obama made it so this restriction applied to the entire showerhead overall rather than each nozzle. Trump wants each individual nozzle to be considered a showerhead, so that every nozzle can produce 2.5 gallons of water per minute.

He has directed Energy Secretary Chris Wright to rescind the change by the Obama administration. “We’re going to get rid of those restrictions. You have many places where they have water, they have so much water they don’t know what to do with it. But people buy a house, they turn on the sink, and water barely comes out. They take a shower, water barely comes out. And it’s an unnecessary restriction,” said the president. The executive order will also impact sinks and toilets.

Critics argue that Trump’s executive order is irrelevant since modern showerheads have no trouble delivering good water pressure and meeting water flow standards.

“Showerheads seem to be a pet peeve of President Trump — he keeps bringing them up,” said Andrew deLaski, executive director of the Appliance Standards Awareness Project (ASAP), to Fast Company. “But his concerns are outdated — while there were problems with showerheads sold in the 1990s, those problems have long since been solved by manufacturers’ modern designs.”

As for consumers, higher water usage could lead to higher monthly utility bills. About 17% of water used in American homes is for showers and 26.7% is for toilets, according to the U.S. Environmental Protection Agency (EPA), and the cost of water has surged across the U.S. in recent decades. The EPA estimates that 9.2% to 14.6% of all U.S. households don’t have affordable access to water services.

Bills are rising faster in some regions, as recent research points out.

Where water prices are rising

The average American uses about 82 gallons of water every day, and the average family spends more than $1,000 on water every year, according to the EPA.

The Bank of America recently spotted that water bills are rising much faster in certain states.

Last year, water bills in the Mid-Atlantic, Pacific, and West North Central regions rose faster than the national rate. The Mid-Atlantic (New Jersey, New York, and Pennsylvania) saw the biggest price jump in 2024, with a year-over-year increase of 9.5%, compared to the national increase of 6.8%.

“It’s possible that labor-related inflation and seasonal charges due to weather in these states are more directly passed onto to customers,” said the report. “Various factors, such as infrastructure age, localized climate risks, and respective state policies, can influence regional water rate disparities.”

The Midwest was the only region with water bills higher than the overall U.S. level for the past two years, and the Northeast was the only region to be consecutively lower.

Higher-income households saw the biggest increases, but lower-income households typically pay more as a percentage of their income.

“And with local utilities contending with rising operational costs caused in part by climate change-induced shifts, more households could fall into ‘water debt,’” noted the report.

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

How can average consumers keep their water bills low?

With eased regulations on water flow — combined with rising prices and growing water shortages — it’s possible those bills will jump even higher. But there are measures you can take to keep your water bill from boiling over.

Simple measures include taking shorter showers or cutting back on baths. The EPA says a full bathtub uses up to 70 gallons of water while a five-minute shower uses 10 to 25 gallons. You can also turn off the tap while you’re brushing your teeth or lathering soap on your hands.

You could also look into installing water-saving fixtures, including faucets, showerheads and toilets. Products with the WaterSense label are more water-efficient (and equally as effective) than standard models — and can save you hundreds of dollars a year. Also check for leaky taps and toilets, which can literally lead to money down the drain.

While there’s an upfront cost, replacing older dishwashers and washing machines with Energy Star-certified appliances can save you money in the long run. For example, an Energy Star-certified dishwasher saves about 5,800 gallons over the course of its lifetime — and only costs about $50 a year to run. You may be eligible for a rebate to offset the cost of purchasing energy-efficient appliances.

If you have a lawn, water it before sunrise or after sunset (during the day, the water could evaporate in the sun rather than sinking into the soil). Also, use sprinklers with low-flow sprinkler heads or invest in smart irrigation controllers so you can adjust your watering levels based on weather and other factors.

You could even swap out your grass for native or drought-tolerant plants — known as xeriscaping — which could lead to substantial savings down the road.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Could misinformation about Social Security be paving the way for privatization? That’s how Bernie Sanders sees it.

Sen. Bernie Sanders of Vermont told CNN that lying about Social Security “is a prelude not only to cutting benefits, but to privatizing Social Security itself.” By making the system appear dysfunctional, then “why would anybody want to support it?”

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DOGE aims to cut 12% of the Social Security Administration (SSA) workforce, reducing staff from 57,000 to 50,000. It’s also consolidating 10 regional offices down to four and closing 45 field offices across the country, according to Government Executive.

A leaked email from SSA’s acting commissioner Leland Dudek, published by The Bulwark, sparked fresh fears about privatization.

The March 1 email to staff stated they need to “revitalize SSA operations by streamlining activities” and “outsource nonessential functions to industry experts.”

Why lawmakers are talking about privatizing Social Security

This wouldn’t be the first time politicians have attempted to privatize Social Security. Back in 2005, former president George W. Bush floated the idea of creating privatization accounts, in which workers could divert a third of their payroll taxes into a private account. It did not go over well.

What’s different this time? A false narrative that the current program is rife with waste and fraud.

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Elon Musk, who spearheads the Department of Government Efficiency (DOGE), told Fox News that Social Security was “a mechanism by which the Democrats attract and retain illegal immigrants by essentially paying them to come here and then turning them into voters.”

In late February, Musk told podcaster Joe Rogan that Social Security is the “biggest Ponzi scheme of all time,” and accused the program of fraud and abuse.

President Donald Trump has reiterated Musk’s false assertion that millions of dead people are receiving Social Security checks.

Under the Biden administration, the SSA’s Office of the Inspector General conducted Social Security audits of payments from 2015 and 2022 and found that most improper payments were overpayments — not payments to dead Americans.

The office uncovered $72 billion in improper payments, but while that sounds like a lot, it’s less than 1% of the total benefits distributed over seven years.

“So why do you lie so much about Social Security? Why do you make it look like it’s a broken, dysfunctional system?” Sanders asked in the CNN interview. “The reason is to get people to lose faith in the system, and then you can give it over to Wall Street.”

Pros and cons of privatization

Social Security has been under the microscope for years, thanks to a long-term funding shortfall. If nothing is done, it will run short of funds by 2034, with only enough to pay beneficiaries 79% of their scheduled benefits.

The program is funded by employers and employees through payroll taxes (each paying 6.2% of the employee’s earnings, while self-employed workers pay the full amount).

But with fewer working-age Americans and a record number of baby boomers retiring, those payroll taxes aren’t producing enough revenue to keep pace with demand.

There are a number of options for making up this shortfall, such as raising the retirement age, eliminating the taxable income cap or raising payroll tax rates.

A vast majority (85%) of Americans polled in a National Academy of Social Insurance survey (NASI) want their Social Security benefits to remain intact — even if it means raising taxes.

Advocates of privatization believe the private sector could do a better job managing the program. Privatization would involve diverting payroll tax contributions into self-directed private accounts.

Proponents say this would give workers more options and allow them to make better investment decisions. For example, they could increase their contributions so they could build up their retirement funds faster.

Advocates say it could result in better investment returns. Currently, Social Security funds are invested in low-risk government bonds, which are guaranteed by the U.S. government.

Critics of privatization say it carries more risk. Rep. John Larson (D-Conn), pointed out in an interview with CNBC that people’s 401(k) plans dropped in value alongside the stock market crash of 2008 — but Social Security never missed a payment.

Another consideration is the cost of the transition.

“Social Security has accumulated trillions of dollars in liabilities to workers who are already retired or who will retire soon,” according to Brookings research. “To make room for a new private system, policymakers must find funds to pay for these liabilities while still leaving young workers enough money to deposit in new private accounts.”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

The founder of Bridgewater Associates, one of the world’s largest hedge funds, is voicing concern that President Donald Trump’s economic agenda could lead to “something worse than a recession.”

“Right now, we are at a decision-making point and very close to a recession,” billionaire investor Ray Dalio told NBC’s Meet the Press. “And I’m worried about something worse than a recession if this isn’t handled well.”

A recession is typically defined as two consecutive quarters of negative GDP growth. A much more “profound” change would be a breakdown of the current monetary order. (It’s worth pointing out that Dalio correctly predicted the 2008 financial crisis.)

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What’s worse than a recession?

Trump has triggered global economic chaos with his on-again, off-again tariffs, most recently declaring a 90-day pause on ‘reciprocal’ tariffs — except for China.

In that case, tariffs have increased to 145%. With markets in turmoil and consumer confidence plummeting, more economists believe a recession is likely.

But Dalio believes Americans could be facing more than a recession. Tariffs, combined with a high level of debt and a rising superpower challenging the existing superpower, could lead to “profound changes” in the world order.

“Such times are very much like the 1930s,” he told NBC.

The end of the Second World War ushered in a new monetary and geopolitical world order. But history tends to repeat itself.

“These go in cycles that can be measured, and I worry about the breakdown of that kind of order, particularly since it doesn’t need to happen,” he told NBC, adding that there are better ways to restructure debt.

Whether tariffs are implemented in a “stable” way or a “chaotic and disruptive way” can make “all the difference in the world,” he said. But so far, the tariffs have been akin to “throwing rocks into the production system.” In other words, highly disruptive.

“Right now we’re at a juncture,” he told NBC. He believes Congress needs to get the budget deficit down to 3% of GDP while managing trade deficits “in the right way.” If not, there will be a supply-demand issue for debt and “the results of that will be worse than a normal recession.”

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How can you prepare your finances?

If you’re an average American, how can you heed Dalio’s warning? Start by establishing an emergency fund (if you don’t already have one) that will cover at least three to six months of expenses — perhaps more, if you’re in a job that could be impacted by tariffs and trade wars.

Pay down high-interest debt (like credit cards) and avoid building up more debt if possible. While times of uncertainty can lead to retail therapy — where we buy something to get a temporary hit of dopamine to combat our stress and anxiety — you’ll likely feel better in the long run if you cut back on unnecessary spending.

After you’ve taken care of your emergency fund and high-interest debt, you can prioritize saving for retirement and other long-term goals. You may want to consider diversifying your income stream, like taking on a side hustle, or reskilling to manage changes in the job market.

It may also be a good time to diversify your investments across different asset classes to mitigate risk. That might mean adjusting your mix of stocks, bonds and other assets.

If you’re close to retirement, you might want to shift to lower-risk assets, like dividend-paying stocks. Alternative investments , such as gold and real estate, are often considered a hedge against inflation and recession.

If you’re new to hedging — a risk management strategy that can help offset losses by purchasing investments in an opposite position to an existing investment — you may want to consult with a financial advisor to see how this could help mitigate risk in your portfolio.

Depending on whether you’re close to retirement or not, you may want to adjust your retirement strategy — and adjust your risk tolerance to match that strategy. If you’re a young investor, you still have time for the market to recover, so avoid panic selling.

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Mortgage rates are climbing in response to a sell-off off in U.S. Treasury bonds, according to CNBC.

Throw in an accelerated mortgage sell-off in China and things could get much worse. Mortgage rates tend to track the 10-year Treasury yield, so it doesn’t bode well for mortgages if investors decide to sell U.S. Treasury bonds.

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Adding to the risk is the possibility that U.S. mortgage-backed securities (MBS), 15% of which are held by foreign countries, could also be increasingly on the selling block

“If China wanted to hit us hard, they could unload Treasuries. Is that a threat? Sure it is,” Guy Cecala, executive chair of Inside Mortgage Finance, told CNBC.

At the time of writing, President Donald Trump had imposed tariffs of 145% on Chinese goods, while China retaliated with tariffs of 125% on imported American goods.

If countries like China decide to dump U.S. Treasuries and MBS in retaliation for tariffs and trade policies, how could that impact you?

Why this matters

Treasury securities are bonds issued and backed by the U.S. federal government, while mortgage-backed securities (MBS) contain pools of mortgages.

Foreign countries own $1.32 trillion of U.S. mortgage-backed securities, according to a global markets analysis from Ginnie Mae. China is one of the largest holders of agency mortgage-backed securities, along with Japan, Taiwan and Canada.

If Chinese institutions started selling off MBS — and if other countries start following suit — it could ripple through global financial markets.

Some doubt it will happen. This would “damage China’s own financial interests by devaluing its remaining holdings and destabilizing global currency markets,” Melissa Cohn, regional vice-president of William Raveis Mortgage, told Newsweek.

It’s generally thought to be in China’s best interest that the country keep its currency, the renminbi (RMB), lower than the U.S. dollar, since — as a nation dependent on exports — it wants to keep its prices competitive. Thus, by purchasing U.S. debt, China maintains the balance according to which Americans can continue to buy more Chinese products.

Still, an escalating trade war has raised uncertainty — and a sell-off isn’t off the table if China is willing to absorb losses. China had already begun selling off some of its U.S. MBS last year and there’s speculation it’s continuing to do so.

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What does this mean for US homebuyers?

MBS investors influence mortgage rates, based on what they’re willing to pay for mortgage-backed securities. Accelerating a sell-off would translate into lower prices for the bonds and, thus, higher mortgage rates for Americans, especially those with variable-rate mortgages.

“Most investors are concerned that mortgage spreads would widen in response to either China, Japan or Canada coming in with a retaliatory objective,” Eric Hagen, mortgage and specialty finance analyst at BTIG, told CNBC.

For those unlucky homeowners, even refinancing could leave them with higher payments. At any rate, refinancing would be less attractive, since rising rates could negate any potential savings. The 30-year fixed mortgage rate (as of April 17) averaged 6.83%, according to Freddie Mac.

Some buyers could also be priced out of the market. Higher mortgage rates can lead to a reduction in demand and, in turn, lower housing prices, so sellers may be tempted to stay put until the market improves.

Since higher rates lead to higher monthly payments — and a higher debt-to-income ratio for borrowers — this scenario can also lead to a tightening of lending standards. To mitigate risk, lenders may increase credit score requirements or require larger down payments.

If you’re looking to buy a home, secure a mortgage pre-approval so you have a budget to work with (though a pre-approval isn’t a guarantee). If you can get a good rate now, you may want to lock it in. If you’re a first-time homebuyer, you might be able to apply for an FHA loan, which is guaranteed by the Federal Housing Administration.

If demand stalls, sellers may want to consider lowering the asking price or offering incentives (such as covering the buyer’s closing costs) to sweeten the pot.

On the other hand, amid economic turmoil and plummeting consumer confidence, buyers and sellers may simply choose to wait it out.

In the meantime, it’s a good idea to build up your emergency fund to help cover higher costs if necessary.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Humans often seek easy answers and shortcuts. This is not always a flaw, but a form of efficiency. So, it’s no surprise that we want a ‘magic’ answer to one of the biggest financial decisions we need to make: how much to save for retirement.

As a result, we often have a ‘magic number’ in mind for our retirement savings.

This year, that ‘magic number’ Americans believe they’ll need to retire comfortably is $1.26 million, according to Northwest Mutual’s 2025 Planning & Progress Study.

This is $200,000 less than the estimated $1.46 million they believed they’d need when they were surveyed last year. This number is also more in line with the 2022 and 2023 estimates, indicating a reversal in thinking from last year to the years before.

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Why the ‘magic number’ might be lower this year

It’s likely that the decline in the ‘magic number’ from last year is at least partially related to declines in inflation, which has been falling — albeit unevenly — since peaking in the summer of 2022.

As inflation has fallen, so too have expectations of future inflation, which were lower in 2024 than in the previous couple of years. This suggests that for that year, future retirees may not believe high inflation would eat away at their retirement savings, compared to years prior.

It may also be that views on retirement are changing. Whether by necessity or intention, about half of workers plan not to retire before the ‘traditional’ age of 65 and 39% expect to retire only at 70 or older, or not to retire at all, according to a report by the Transamerica Center for Retirement Studies. This could mean a shorter retirement and additional income during this period, reducing the size of an individual’s needed nest egg.

Is the ‘magic number’ a reasonable goal?

Before you start worrying about achieving that ‘magic number,’ it’s worthwhile to determine if it’s a reasonable goal. In 2023, the average expenditure for a household where the ‘head’ of the household is 65 years or older was $60,087, according to the U.S. Bureau of Labor Statistics.

Assuming most retirees will collect Social Security benefits — averaging about $1,997 in March 2025 (just under $24,000 a year), and further assuming only one member of the household will collect benefits, a household would need an additional sum of about $36,000 a year to cover expenses.

A common rule of thumb is to withdraw 4% of your nest egg in the first year of retirement and then to continue withdrawing that amount (adjusted for inflation) each year afterward. This would allow your nest egg to provide income for the duration of most retirements. If you need $36,000 per year, then you’d need an initial nest egg of about $900,000 — making $1.26 million more than many need.

But research by the Employee Benefits Research Institute shows that retirees are cutting back on expenditures because of insufficient income, so using actual expenditures may give a more accurate picture of the amount retirees will need to live comfortably.

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Another retirement rule of thumb is to estimate that you’ll need 70% to 80% of your pre-retirement income to retire comfortably. Real median household income in the U.S. was $80,610 in 2023, according to the U.S. Census Bureau.

A range of 70% to 80% would be about $56,000 to $65,000, which — when applying $24,000 from Social Security — implies a required nest egg of $800,000 to $1.025 million, which is still below the ‘magic number’ of $1.26 million.

Retirement is personal

While the ‘magic number’ may be higher than many people need, calculations that use averages, medians and rules of thumb don’t help you determine what your exact number should be — and your own situation is likely to be quite unique.

After all, retirement is a very personal thing. If you want to estimate what your own ‘magic number’ might be, it’s worth speaking to a financial advisor.

Many advisors have access to modeling programs that factor in your personal circumstances and plans for retirement to come up with a number that works for you. Once they know this number, they can set up a suitable savings and investment program so you can reach this goal. A helpful feature is that these models can be used to run scenarios — such as accounting for higher inflation — to see how this might affect your plans.

There are several factors that go into figuring out your number. Where you plan to retire can make a big difference, as can what you plan to do in retirement.

Some states are much more expensive than others for retirees, while others continue to be popular. And if you plan to travel a lot, this is likely to cost you more than if you plan to stay close to home and spend time with your children and grandchildren.

Healthcare can be a big expense that grows through retirement. It’s impossible to predict what health challenges you may encounter, but if you already have chronic conditions that may get worse with time, it’s important to consider how this might lead to extra expenses in retirement and require a larger nest egg.

Non-investment sources of income will also play a role. Most retirees are at least somewhat reliant on Social Security and some may have a pension — or even plan to work part-time in their semi-retirement years.

You may want to have a ‘magic number’ — but you should arrive at it through analysis of your own unique situation. And you should be prepared to change that number if your retirement goals or circumstances change as you age.

What to read next

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• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• There’s a 60% chance of a recession hitting the American economy this year — protect your retirement savings with these essential money moves ASAP (most of which you can complete in just minutes)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.