Author: Vawn Himmelsbach

Long-term investing can test even the most disciplined investors. With markets swinging on everything from AI breakthroughs to political headwinds, the temptation to act emotionally — especially during big wins or downturns — is real.

Amos Nadler, a behavioural finance expert and former professor at Western University’s Ivey Business School, knows this first-hand. Years ago, he bought shares of Nvidia (NASDAQ:NVDA) for just US$0.48 each. But before the chipmaker exploded into a US$3 trillion AI juggernaut, he sold most of his holdings — missing out on one of the biggest stock runs in tech history. As of March 2025, Nvidia trades around US$108 a share, after its value surged on AI chip demand and record-breaking earnings.

Nadler’s story is more than a missed opportunity — it’s a case study in cognitive bias, and it holds critical lessons for investors trying to navigate 2025’s volatile but opportunity-rich market.

The biggest reason for investor mistakes

When Nadler was starting his teaching career, he wanted to gain some hands-on investment experience to share with his students. As a result, one of his earliest investments was stock in technology company Nvidia (NASDAQ:NVDA)— about US$800 to US$1,000 worth of stock. He paid approximately US$0.48 per share.

After holding them for a period of time, Nadler noticed that the shares had earned a decent profit so he decided to sell a large chunk of his holdings. This was before 2014 and before Nvidia (NASDAQ:NVDA) would become a household name.

Nadler’s goal was to talk about his experience. Turns out the sale gave Nadler lots to talk about with his students — since it was a big mistake.

“I needed some war stories. I needed to talk about gains and losses,” he recently told CNBC Make it. “I need to put my own money to play and experience these things, and take it out of the lab, take it out of the textbooks.” Nadler’s lesson should be used by any investor tempted by bias or emotion.

According to his trading brokerage, Nadler paid about US$0.48 per share, factoring in the stock splits during the company’s history. As of March 31, 2025, Nvidia (NASDAQ:NVDA) stock closed to US$108 per share, reflecting recent market volatility influenced by factors such as underwhelming initial public offering (IPO) of CoreWeave and concerns over potential tariff implementations. The firm’s value increased by more than US$2 trillion just last year.

If Nadler had held onto the stock, his gain would have been over 28,000%. The value of his holdings would have been “enough to buy a nice house somewhere,” according to Nadler.

Here’s the thing: Nadler sold the stock because he succumbed to a cognitive bias known as loss aversion. A cognitive bias is a consistent, repeated error in the way we process information and perceive reality. Loss aversion is a common cognitive bias that leads us to perceive losses as more significant than gains.

In investing, loss aversion can cause us to fear losing the gains of a winning bet in our portfolio. It’s what happened to Nadler when he chose to sell his Nvidia (NASDAQ:NVDA) stock. As he tells it, “What was going through my head was, ‘Hey, I’m new with this. I just made a significant profit in a very short amount of time. I want to lock it in because I’m feeling afraid it may drop again.’”

How loss aversion is driving your investment decisions

You can judge your own loss aversion by considering whether you’d rather have $100 or flip a coin to either gain $200 for heads or $0 for tails. Most people would prefer the certain $100 and value the potential “loss” of this as greater than the potential but uncertain gain of $200. Still not sure, consider the same coin toss scenario but with a payout of $500 or $1,000. The lower the sum you’re willing to accept, rather than risk for the 50/50 chance of getting more, illustrates how risk averse you are (both in coin tosses and investing).

So, how does loss aversion impact your investment decisions?

If you choose to cash-in on your gains, end up being too conservative in your portfolio construction, try to time your entry into the market or instinctively move to cash to avoid volatile markets than you’re operting from a loss aversion bias — and this can all hurt your overall portfolio performance.

Avoiding this cognitive bias means carefully evaluating any stock sale, especially if you plan to move to cash, and trying your best to remove emotion (such as fear) from the decision. For instance, if you’re planning to sell a stock because it’s had a strong run, but fundamentals suggest it’s still a solid investment, you may want to step back and evaluate whether you’re making a rational decision or your actions are being driven by fear.

Engaging with a financial adviser could potentially help you manage that fear by providing an arms-length assessment of your decisions. An adviser could also help you set realistic investment goals so you’re not relying on “bets,” while also helping you diversify your holdings to spread your risk and make individual risks within the portfolio feel less intimidating.

Increasingly, there are also technological tools available to help you remove emotion from investment decision-making. For instance, Nadler founded Prof of Wall Street, which provides software products that help investors use behavioural science to manage biases and improve investment decision-making.

Fear can be a powerful force. Identifying it and enlisting the help of a financial adviser or technological tool could help to take the cognitive bias out of investment decision-making and, hopefully, result in better returns.

Sources

1. CNBC Make It: I sold Nvidia — then it went up over 28,000%, says behavioral finance prof: I could’ve bought ‘a nice house somewhere’, by Ryan Ermey (Dec 12, 2024)

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

The U.S. is not in a recession — yet.

But with threats of high tariffs on U.S. imports, policy uncertainty, mass deportations and Department of Government Efficiency (DOGE) cuts, some economic observers believe the odds are rising.

“We’ve got a real uncertainty problem, it’s going to be hard to fix that,” former Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television’s Wall Street Week with David Westin.

“We’re looking at a slowdown relative to what was forecast, almost for sure, and a serious, near 50% prospect of recession.”

J.P Morgan’s chief economist Bruce Kasman predicts a 40% chance of a U.S. recession this year.

“If we would continue down this road of what would be more disruptive, business-unfriendly policies, I think the risks on that recession front would go up,” he told reporters.

Of CFOs polled in the latest CNBC CFO Council Survey, the majority (95%) said government policy is impacting their ability to make business decisions. Three-quarters expected the economy to enter a recession in the latter half of this year or in 2026.

So what exactly defines a recession?

In the U.S., recessions are officially declared and dated — often retroactively — by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee.

The committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

In wider practice, two consecutive quarters of negative gross domestic product (GDP) growth point to a recession.

Though there hasn’t been an official declaration, there are three warning signs all pointing to a potential recession:

The yield curve is signaling a recession. One predictor of a recession is when the yield on 10-year Treasury bonds falls below that of the three-month Treasury bill.

This occurred in late 2022 and lasted until late 2024, and occurred again in late February — and the yield spread between the two remains negative.

The time from when this situation occurs until the onset of a recession can vary, but it’s a strong indicator of a recession in the coming 16 to 20 months.

Leading economic indicators are pointing to a slowdown. Another predictor is the Conference Board Leading Economic Index (LEI). This index fell%20in%20January.) in February for the third consecutive month. The Conference Board is forecasting that GDP growth will slow.

Data and sentiment are turning negative. Consumer confidence is dropping, recent data for retail sales has been weak and the Federal Reserve Bank’s Economic Policy Uncertainty Index is high. CEOs are more pessimistic, consumers are pulling back and “workers are getting nervous,” according to The Wall Street Journal. And the Federal Reserve Bank of Atlanta’s GDPNow forecasting model is predicting that GDP growth will retract by 1.8% in the first quarter of 2025.

Be proactive to weather a downturn

All this talk of a recession may have you concerned. The best approach is to be proactive — but not panicked.

Build up an emergency fund. Prepare for potentially difficult times by setting aside an emergency fund that covers at least three months to a year of expenses, depending on how long you think it might take to get a job if you’re laid off. To boost your savings, investigate a high-interest savings account (HISA) or a high-yield savings account.

Pay down debt and avoid unnecessary expenditures. Servicing a large amount of debt could be a problem if your income declines or everyday costs go up (like egg prices). Avoid extra financial stress by creating a budget, paring down spending where you can and weighing large purchases carefully.

Protect or increase your income. You may want to look into a side hustle or second job to bring in some extra cash.

Talk to a financial adviser about how to maximize your investment performance. Make sure your portfolio is suitably diversified, including geographically, with exposure to sectors that perform better in a recession.

Most financial professionals advise against trying to time the market. Multiple studies show that staying in the market during downturns leads to better long-term returns, especially when you employ dollar-cost averaging — investing the same amount of money in the same securities at regular intervals regardless of their prices.

If you’ve been laid off, talk to your adviser about strategies that may make sense in low-tax years, such as a Roth conversion.

You may not have much control over whether there’s a recession, but you can take steps to weather the storm.

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

With the Trump administration’s political and economic policies shocking many around the world, some strategists are pondering if American exceptionalism is at risk.

U.S. exceptionalism is the belief among investors and businesses that the country is unique and superior to others. This idea bolsters its economy.

Predictability and the rule of law have given the U.S. this “edge,” according to Mohamed El-Erian, president of Queens’ College in Cambridge and chief economic advisor at Allianz, but he worries that it is being “eroded.”

“The more these two things are questioned, the more that people are going to start questioning U.S. exceptionalism,” he told Bloomberg. He stopped short of announcing the death of U.S. exceptionalism, but said it is currently “under enormous pressure."

When President Donald Trump was elected in November, investors were betting on his policies like tax cuts to spur economic growth and boost U.S. stocks.

But an on-again-off-again trade war, along with an “aggressive posture toward Ukraine and a wave of Elon Musk-driven government cuts,” are instead undermining sentiment, according to BNN Bloomberg, which notes that the “Trump bump is now the Trump slump.”

The dollar isn’t outperforming; instead, it’s headed for its worst month since 2023. The U.S. stock market dropped into correction territory and is also lagging behind the rest of the world this year. Meanwhile, U.S.-listed international stock ETFs saw inflows of nearly $13 billion in February after a much quieter January, according to Morningstar.

“There’s been an enormous upending of all the consensus trades that were in place at the beginning of the year,” El-Erian told Bloomberg. “All those trades have been turned on their heads.”

Questioning American exceptionalism

Back in November, Oxford Economics remained optimistic that U.S. exceptionalism would continue in 2025, noting that it’s not the first time the economy “has dealt with elevated uncertainty” and that businesses would be able to “quickly adapt.”

With “the prospects for expansionary fiscal policy on top of an already solid backdrop for U.S. consumer spending and investment, the U.S. economy will likely further distance itself from the rest of the pack,” it noted.

Fast-forward a couple of months, and a lot has changed. U.S. CEO confidence plummeted in March, according to one survey, and the Trump administration’s gyrating tariff threats was the most commonly cited reason for declining optimism. U.S. consumer confidence has also tumbled. The Federal Reserve has lowered its gross domestic product (GDP) growth forecast for this year to 1.7% from 2.1%.

Citi strategists are saying U.S. exceptionalism has “paused” under the Trump administration. Not only has the bank downgraded U.S. stocks to “neutral,” it has upgraded Chinese stocks to “overweight,” and recommends taking profits in U.S. stocks to invest in Chinese companies.

J.P Morgan’s chief economist Bruce Kasman told Reuters the country’s standing as an investment destination and its “exorbitant privilege” are at risk of lasting damage if the administration undermines trust in U.S. governance.

Strategists at Morgan Stanley and Goldman Sachs downgraded GDP growth forecasts for the U.S. in 2025 over tariff concerns. They also raised their outlook for Chinese stocks, with Goldman Sachs strategists Kinger Lau and Timothy Moe noting that “China is back on the radar, at least in terms of investor interest.”

El-Erian also told Bloomberg that there’s hope for a “Sputnik moment” in Germany, as the country shifts fiscal policy to support a surge of spending on defense and infrastructure.

How can investors make sure they’re well diversified?

This may be a good time to make sure your portfolio is diversified geographically.

Vanguard, for example, recommends having 20% of your portfolio invested in international stocks and bonds, but “to get the full diversification benefits, consider investing about 40% of your stock allocation in international stocks and about 30% of your bond allocation in international bonds.”

One of the easier ways to gain broad exposure to international assets is ETFs. You have a choice of investing in developed markets (which would include the U.K., France and Japan) or emerging markets, like China, India and Mexico. Since emerging markets tend to be more volatile, Vanguard recommends “that you don’t overweight your allocation to emerging markets.”

When it comes to buying foreign stocks, ETFs are often a better choice than mutual funds, according to Forbes, since “ETFs are very portable from one brokerage account to another” and they’re “better at tax time.”

You’ll want to do your research or talk to your adviser about the potential risks involved such as market risk and liquidity, as well as costs, fees and tax issues. There are a number of ETF providers to choose from, including iShares by BlackRock, Vanguard, Charles Schwab, Invesco, WisdomTree and VanEck, among many others.

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?”

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.

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.”

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

Americans now believe they’ll need more money to retire comfortably than they did even a few years ago.

The “magic number” for retirement savings has grown by more than 50% since 2020 to roughly $1.5 million, according to Northwestern Mutual’s Planning & Progress Study 2024.

But, according to a recent analysis, how much you’ll need to live comfortably in retirement is highly dependent on which state you choose to live out your golden years.

The ‘magic number’ keeps getting higher

The ‘magic number’ for retirement savings has jumped 50% since 2020 — driven in large part by fears of inflation eating away at people’s retirement savings. Consider the dramatic inflation rates we saw from 2021 to 2023, which reached as high as 9.1% in June 2022.

Those inflation fears aren’t behind us, though. Consumer confidence has fallen to a 12-year low, according to the latest Conference Board Consumer Confidence Index, which received write-in responses showing that “inflation is still a major concern for consumers and that worries about the impact of trade policies and tariffs in particular are on the rise.”

Another factor bumping up that magic number is the belief that Americans will spend more time in retirement than previous generations. Three in 10 millennials and Generation Z Americans “believe it’s likely or highly likely that they will live to age 100,” according to Northwestern Mutual’s study.

While millennials expect to retire at 64, Gen Z plans to retire earlier, at age 60. This is much earlier than baby boomers, who plan to enter their golden years at age 72, and Generation X, who expects to retire at 67.

That means Gen Z may need their retirement savings to last 40 years. But those expectations may be far from the current reality.

According to the Transamerica Center for Retirement Studies, the median retirement age is 62, while the U.S. Centers for Disease Control and Prevention puts the average life expectancy in America at 74.8 years for men and 80.2 years for women.

Determining your retirement income

Retirees need to carefully plan how much to withdraw each year to live comfortably in retirement while ensuring their money will last as long as possible. A common rule of thumb is known as the 4% rule that, when followed, should allow your portfolio to last at least 30 years.

This rule stipulates that in the first year, a retiree withdraws 4% of their portfolio, followed by inflation-adjusted amounts in the following years. With a portfolio of $1.5 million, this will provide $60,000 in the first year.

Most Americans won’t have to rely solely on their nest egg to fund their retirement since they’ll also receive Social Security benefits (and possibly a pension). In February 2025, the average monthly benefit paid to retired workers was $1,980, which is about $23,760 per year.

With a portfolio of $1.5 million — supplemented with an average monthly Social Security benefit — a retiree could reasonably expect to live on $83,760 per year. Still, life happens, so you may need to withdraw more (or less) than 4%, which will dictate how long your nest egg will last.

But withdrawals aren’t the only factor to consider.

Where your nest egg will and won’t last

A recent analysis looked at how long $1.5 million would last, by state, based on the cost of living after Social Security. According to the study, your retirement nest egg will last longest in West Virginia, where the annual cost of living after Social Security is $27,803 and your $1.5 million portfolio will last 54 years.

It’s followed by:

• Kansas, with an annual cost of living after Social Security of $28,945 (a $1.5 million portfolio will last 52 years)
• Mississippi, with an annual cost of living after Social Security of $29,426 (a $1.5 million portfolio will last 51 years)
• Oklahoma, with an annual cost of living after Social Security of $29,666 (a $1.5 million portfolio will last 51 years)

Meanwhile, you’ll whittle down your nest egg fastest in Hawaii, where the annual cost of living after Social Security is $87,770 and your $1.5 million portfolio will last just 17 years. That’s a far cry from West Virginia, where your portfolio will last more than three times longer, at 54 years.

Hawaii is followed by:

• Massachusetts, with an annual cost of living after Social Security of $65,117 (a $1.5 million portfolio will last 23 years)
• California, with an annual cost of living after Social Security of $63,795 (a $1.5 million portfolio will last 24 years)
• New York, with an annual cost of living after Social Security of $50,997 (a $1.5 million portfolio will last 29 years)

Of course, there are several factors you’ll need to consider when choosing where to retire (like being close to your grandkids). But given that your money will last an extra 37 years in West Virginia than in Hawaii, where you choose to live in retirement is something to seriously consider — particularly if you don’t have a $1.5 million nest egg.

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

Many Canadians have decided not to travel in the U.S. as a trade war continues.

Forward bookings for flights between Canada and the U.S. in coming months have plunged by as much as 75% compared with the same period in 2024, according to OAG, a global travel data provider.

In February, the number of Canadians crossing the land border into the U.S. dropped almost 500,000 compared to the same period last year, according to data from U.S. Customs and Border Protection (CBP) — reaching levels not seen since the height of the Covid-19 border closures.

“This is like Covid all over again,” said Len Saunders, an immigration lawyer in Blaine, Wash., which borders the Canadian province of British Columbia, in an interview with CBC News. “With the rhetoric coming from Trump — people just don’t want to come down here.”

The number of Canadian residents returning from the U.S. by flights also fell by 13.1% in February, with Air Canada, WestJet and United Airlines announcing cuts to service due to declining demand.

“A 10% reduction in Canadian travel could mean 2.0 million fewer visits, $2.1 billion in lost spending and 14,000 job losses,” according to the U.S. Travel Association, which noted that Canada is the top source of international visitors to the country, with 20.4 million visits in 2024.

But it’s not just Canada. The Trump administration is also escalating a trade war with Mexico, China and the European Union, and domestic tourism has also slowed down this year, with Bank of America aggregated card data showing softer lodging, tourism and airline spending. "It could be that the recent drop in consumer confidence is translating into people hesitating to book trips, or considering paring them back. But bad weather and a late Easter this year are also likely playing a part," said the bank.

While this will undoubtedly impact Americans working in the tourism and hospitality industry, it could also have impacts on everyday Americans.

Why Canadians are avoiding U.S. travel

It’s not just tariffs that have shaken Canada-U.S. relations. Taunts about Canada becoming the 51st state, threats of annexation and reports of Canadians and other nationals being detained by Immigration and Customs Enforcement (ICE) — like the account of one Vancouver woman detained by ICE for two weeks — is keeping Canadians away.

Then there’s the Canada-U.S. exchange rate. The loonie — which plummeted to its lowest level in more than 20 years when Trump first announced impending tariffs — has since made modest gains. But that could be a good thing for American travelers.

But Barbara Barrett, executive director of the Frontier Duty Free Association, told CBC News that cross-border traffic declines aren’t due to the exchange rate. Rather, it’s about anti-tariff sentiment.

“We’ve seen the dollar fluctuate up and down before and we haven’t seen this sort of dramatic decline,” she said. “If it was all about the dollar — we’d have a flood of Americans coming over and we’re not seeing that.”

While many Canadians and other foreign nationals are boycotting the U.S., some don’t feel it’s safe to go right now. Several countries — including the U.K., Denmark, Finland, Germany and Canada — have updated their travel advisories for the U.S. regarding immigration requirements and gender identification.

“Since the start of the second Trump administration, there appears to be an uptick in foreign visitors to the U.S. being denied entry, resulting in people being sent back to their original destinations or being held in detention,” according to Wired.

As of April 11, Canadians will also have to register with the U.S. government if they plan to stay in the country for more than 30 days.

What does this mean for American travelers?

While tariffs may not have an immediate impact on domestic travel — like the price of airfare or hotel rooms — ongoing trade wars with multiple countries could eventually take a toll.

The Federal Reserve lowered its outlook for economic growth in 2025 to 1.7%, with inflation projected to creep up from 2.5% to 2.7%. With signs of slowing economic growth and consumer expectations for income, business, and labor market conditions at a 12-year low, Americans may decide to hold off on those vacation plans.

“The longer tariffs last, the more likely we’ll see air travel impacted in the form of higher costs for Boeing and airlines, fewer overall flights, and higher fares,” Scott Keyes, founder of Going, told USA Today.

But if the U.S. does sink into a recession, some travel costs could drop. “That’s because demand for travel typically falls during economic hard times, and with less demand, airlines would be forced to drop prices in order to fill planes,” Keyes said.

Tips for travel planning in uncertain times

Americans traveling domestically may want to consider vacationing in areas impacted by a downturn in Canadian tourism, such as Florida. Prices could drop because of reduced demand; at the same time, you’d be helping to support the tourism industry in those areas.

Visits to national parks, however, could get more complicated. The mass firing of 1,000 national park workers could result in service delays and maintenance issues — so you’ll want to plan any outdoor adventures far in advance.

As gas prices rise as a result of tariffs, road trips could also get more expensive (at home and abroad). So, for example, if you’re traveling in Europe, you may want to compare the costs of traveling by train rather than renting a car.

If prices escalate, airlines and hotels may adjust their prices accordingly. So it may be better to book sooner rather than later to lock in rates for flights and hotels.

Another option is to cash in those frequent flyer miles or credit card travel rewards to save on flights, hotels and rental cars. If you’re in the market for a new travel rewards credit card, keep an eye out for promotional offers that could help fund your next vacation.

It could also be a good time to sit down with a financial adviser to come up with a game plan for uncertain times, which could mean diversifying your portfolio, topping up your emergency fund and perhaps even creating a “travel fund” (say, in a high-interest savings account) so you don’t rack up unnecessary credit card debt on your next vacation.

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

While Elon Musk has claimed that millions of dead people are fraudulently receiving Social Security benefits — an assertion that has been debunked by experts — one Seattle man experienced the opposite problem.

“You wake up one day and discover you’re dead,” Ned Johnson told The Seattle Times in an article published March 15. “It’s been truly surreal.”

But Johnson, 82, is still very much alive. For reasons unbeknownst to him, he ended up on the Social Security Administration’s (SSA) “death master file,” according to the Times, and had his benefits clawed back to November — the month he supposedly died.

Funds were deducted from his bank account for retirement benefits received in December and January, for a total of $5,201. And he hadn’t yet received his February or March checks. His Medicare insurance had also been canceled and his credit report marked him as deceased and ineligible for a loan.

It took nearly two weeks and multiple calls per day to Social Security before he was able to make an appointment. But the appointment was then delayed, which prompted him to make a spontaneous trip to the agency’s downtown office. He described it as a “Depression-era scene” with a long queue and only two tellers.

Once in front of a human, he was able to prove he is, in fact, alive. The agency pledged to fix his predicament.

“When I was in that line, I was thinking that if I was living solely off Social Security, I could be close to dumpster diving,” he recalled.

Social Security mistakes

It’s unclear what led to Johnson being considered deceased by the SSA, however, the agency notes that among the millions of death reports it receives each year, “less than one-third of 1% of are erroneously reported deaths” that require correction. Death reports often come from family, friends or funeral homes and are considered “first-hand” accounts.

But the agency has also been prone to other mistakes. The SSA’s Office of the Inspector General reported last year nearly $72 billion in improper Social Security payments were made from fiscal years 2015 through 2022. That amount represents less than 1% of the benefits paid over that seven-year — and most of those were overpayments.

If you’ve been receiving overpayments — even through no fault of your own — you’re on the hook for them. Under Trump-appointed acting commissioner Leland Dudek, the SSA is reinstating the default overpayment withholding rate to 100% of a person’s monthly benefit until reimbursement is complete. This only applies to new overpayments as of March 27. The withholding rate was previously capped at 10% due to potential financial hardship of beneficiaries. This latest move is expected to save about $7 billion over the next 10 years.

In an article published by the Center on Budget and Policy Priorities, Directory of Social Security and Disability Policy Kathleen Romig insisted that, despite these errors, the agency’s overall payment accuracy rate is well over 99%.

“Only 0.3 percent of Social Security benefits are improper payments, which are typically caused by mistakes or delays,” she wrote.

What to do if it happens to you

Mistakes will always happen, whether from a data entry error or administrative delay in updating a beneficiary’s information. And that can result in delayed benefits, clawbacks or overpayments that require repayment — regardless of who’s to blame for the error.

If you or a loved one are affected by a Social Security error, you’ll want to report it as soon as possible. In Johnson’s case, the error became glaringly obvious when money disappeared out of his bank account. But in other cases it may not be so obvious, so it’s good practice to regularly review your earnings statement for each calendar year to look for any discrepancies.

Contact the SSA as soon as possible to request a correction, either through your Social Security account, by calling 1-800-772-1213 or by visiting a local field office. Make sure you can provide them with the necessary documentation, such as pay stubs or W-2s.

If your request for correction is denied, you can file an appeal. For complex matters, you may want to seek assistance from a financial adviser or attorney. And, as in Johnson’s case, it may require an in-person visit to speed up the process.

Additionally, if your benefits are being withheld in order to reimburse any overpayments, you can make an appeal to the SSA to adjust the amount or waive the collection if you believe the error wasn’t your fault and you can’t pay it back.

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

About 800,000 Oklahomans depend on Social Security — and they’re wondering how proposed Security Social cuts could impact their retirement.

“Oklahomans want to hear and make sure that Social Security is protected and saved, not only for them, but their children, grandchildren,” Sean Voskuhl, AARP Oklahoma state director, told Oklahoma’s News 4. “More than 22% of Oklahomans rely on Social Security as their primary source of retirement income.”

Now under Trump-appointed leadership, the Social Security Administration (SSA) is eliminating 7,000 jobs, significantly reducing its workforce, while closing several SSA offices across the country.

And that leaves Oklahomans with questions.

“Is Social Security going to be fully funded? Are people going to get their payments on time? And will there be people at the Social Security Administration offices to answer questions if people have them?” said Voskuhl.

The impact of proposed Social Security cuts

This comes at a time when a record number of baby boomers are reaching retirement age — a phenomenon referred to as Peak 65. And 2025 is the “peak” of Peak 65, with a record 4.18 million Americans reaching the traditional retirement age of 65, according to a research report by the Alliance for Lifetime Income’s Retirement Income Institute.

“Unlike older retired baby boomers, the majority of Peak 65’ers don’t have pensions, which used to help fill that gap left by Social Security,” according to the report’s author, Jason Fichtner, executive director of the institute and a former chief economist at the SSA.

That means cuts to the Social Security workforce are coming at a time when demand for its services are at an all-time high. Former Social Security Commissioner Martin O’Malley told CNBC.com that recent actions by Elon Musk’s Department of Government Efficiency (DOGE) are putting the benefit checks of more than 72.5 million Americans at risk.

“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.”

Delays could be disastrous for many Americans. In one study, 42% of Americans aged 65-plus said they wouldn’t be able to afford basic necessities like food without their monthly check. For Americans about to retire, staffing cuts and office closures could lead to delays in processing their claims.

At the same time, DOGE — which is helmed by unelected billionaire Elon Musk — is closing 47 local Social Security offices in an effort to save money. Musk has referred to Social Security as “the biggest Ponzi scheme of all time.”

In Oklahoma, a total of 15 federal offices are on the chopping block, including the SSA office in Lawton. These closures will save an estimated $3.7 million, according to DOGE.

How to adjust your retirement savings

From the get-go, Social Security was never meant to be the sole source of a person’s retirement income; rather, it was meant to supplement personal savings and pensions. But an AARP survey found that 20% of Americans aged 50-plus don’t have any retirement savings.

The earlier you start saving, the better — but it’s never too late to start. And that may be more important than ever, with “the imposition of additional tariffs on imports from China, substantial policy uncertainty, sizable pullback in consumer sentiment and spending since the beginning of the year, elevated geopolitical tensions and federal spending reduction initiatives,” according to The Conference Board’s forecast for the U.S. economy.

For those who don’t have a long-term financial plan, it may be worth sitting down with a financial adviser to create a strategy going forward (or to revisit your existing financial plan).

That could include rebalancing into a more diversified mix of investments to include different industries, countries and risk profiles, as well as alternative investments such as real estate or commodities. It could also include mitigating some risk through dividends, in which companies pay distributions to shareholders based on profitability.

Whether you’re saving for the future or close to retirement, you may want to explore your options for bringing in some extra cash, such as taking on a side gig. It may even be worthwhile to reevaluate your retirement plans. Maybe that means working a few more years before retiring, downsizing your home or moving to a less expensive neighborhood or city.

Younger investors have more time to ride out a potential downturn in the economy; those closer to retirement may want to talk to their financial adviser about their options.

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

U.S. President Donald Trump plans to replace income taxes with tariffs, but what does that mean for the average middle-class American?

“Donald Trump announced the External Revenue Service, and his goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay,” U.S. Commerce Secretary Howard Lutnick told Fox News on Feb. 19. The idea is that once the budget is balanced, taxes will be waived for Americans earning less than $150,000 a year.

However, the flaw in this plan is that tariffs are not paid by “outsiders.” Rather, tariffs are a tax placed on imported goods and services.

“When the U.S. imposes tariffs on imports, businesses in the United States directly pay import taxes to the U.S. government on their purchases from abroad,” according to the Tax Foundation. During Trump’s first term, “the economic evidence shows American firms and consumers were hardest hit by the Trump tariffs.”

At the same time, it would be hard to replace the revenue collected from income taxes with revenue from the planned tariffs. According to a study by the Peterson Institute for International Economics (PIIE), a non-partisan research group, the U.S. imported $3.1 trillion in goods in 2023 while raising about $2 trillion through individual and corporate income taxes.

This means it would be nearly impossible to replace income taxes with tariffs, since the tariff rate would have to be “implausibly high,” according to PIIE. The institute determined that even at a “revenue-maximizing tariff rate,” the U.S. could raise only a fraction of what it raises with income taxes.

Additionally, Trump’s policy could become a victim of its own success. If the result of the policy is that most manufacturing moves to the U.S., there will be fewer imports to tariff, making the replacement of income taxes even more difficult.

The Tax Policy Center speculated there could also be a new consumption tax to help with the revenue shortfall.

"Congress isn’t going to vote any time soon to explicitly replace the income tax with a consumption levy. But aggressive efforts to dismantle the IRS combined with a hollowing out of the income tax base could render the existing revenue system unsustainable. And drive lawmakers to replace it with something else," wrote Howard Gleckman a senior fellow at the Tax Policy Center.

Here are 3 potential impacts on America’s middle class if tariffs replaced income taxes:

1. Prices are likely to rise

It’s difficult to quantify the effects of Trump’s tariff proposals since they’re continually changing.

But research has shown that during the last Trump trade war in 2018, tariffs resulted in price increases of 10% to 30% for goods subject to tariffs and that much of the tariffs were passed on to U.S. importers and consumers.

The Federal Reserve of Boston looked at an additional 25% tariff on goods from Canada and Mexico with an additional 10% tariff on goods from China, and estimated they would add 0.8 percentage points to core inflation (excluding food and energy).

The policy proposed during Trump’s campaign (an additional 60% tariff on imports from China and an additional 10% tariff on imports from the rest of the world) would add 2.2 percentage points to core inflation.

2. After-tax income could decline

These price increases will have a greater impact on middle- and lower-income Americans since these demographics tend to have less disposable income.

To test these effects, PIIE studied what would happen if tariffs were maximized in an attempt to replace income taxes. The result? The tax cut for the middle quintile of income earners would not compensate for the tariff increase and they’d see a net after-tax income loss of about 5%.

This loss in income would be 8.5% for the lowest quintile, while the top quintile would come out 2% ahead. The top 1% would see an increase of 11.6%.

Those losing net income to the tariff-income tax trade-off are unlikely to find much help from improved economic and employment conditions.

3. Tariffs could hurt the economy and cost jobs

Oxford Economics estimates that Trump’s 2018 tariffs on Chinese goods and the resulting trade war cost 0.5% of U.S. GDP. “At its peak, the trade war cost the U.S. economy an estimated 245,000 jobs and on a cumulative basis, real household income was $88 billion lower over 2018–2019 (in 2020 prices), or around $675 per household,” it said.

An argument for tariffs is that domestic companies would become more productive and innovative, but one University of California, Davis study of a past era of high tariffs found that they had the opposite effect.

“Less competitive industries are less innovative, and less innovative industries are less productive,” said author Christopher Meissner. “Tariffs probably weakened the incentives to innovate and come up with streamlined processes that keep companies on their toes and productivity high.”

All told, these forces have the potential to be a drag on the economy and employment that may outweigh any jobs created by the tariffs. A study of 151 countries from 1963 to 2014 found that, in the medium term, tariffs have only small effects on the trade balance but lead to lower domestic output and productivity, higher unemployment and greater inequality.

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