Investing

Some experts are backing off their predictions that a recession may be looming.
The latest economic data points to the possibility of a soft landing for the U.S. economy as the Federal Reserve works to tamp down inflation.
However, consumers would be wise to watch for changes in inflation, the labor market and interest rates in the coming months, experts say.

Lucigerma | Istock | Getty Images

Predictions that a recession may be looming for the U.S. economy have so far not come to fruition. Now, some experts are backing off the prediction altogether, including Federal Reserve staff economists.
“What’s out: Mild recession,” states new economic research released by Bank of America this week.

“What’s in: Soft landing, no recession,” the firm’s research declares.
Economists and other experts have been calling for a downturn for a more than a year now, mostly due to high inflation and the steps policymakers have been taking to curb it. Officially, a downturn is defined as defined as a decline in gross domestic product for two consecutive quarters.
As the Federal Reserve has embarked on a series of interest rate hikes to bring inflation down to its 2% target, the concern has been that may tip the economy into a recession.
Inflation has subsided, though it is still above 2%, per the latest government data.
The unemployment rate is still at “near all-time lows,” Bank of America noted. Friday’s jobs report showed the unemployment rate was 3.5% based on new July data, “just above the lowest level since late 1969.”

Unemployment and other factors — growth in economic activity, wage and price pressures in the “right direction” — prompted Bank of America to reassess its previous calls for a mild recession in 2024.
While the firm is weighting those baseline expectations for a soft landing at 45% to 50%, other outcomes are still possible.
“We still think the most likely alternative is a mild recession,” said Michael Gapen, head of U.S. economics at Bank of America, which the firm puts at odds of 35% to 40%.
Meanwhile, the most optimistic outcome, with stronger GDP growth, comes in at 10% to 15%.
Recessions historically tend to be caused by black swan events — unpredictable circumstances that come as a surprise — that are difficult to precisely forecast, noted Mark Hamrick, senior economic analyst at Bankrate.
“I don’t have much confidence at all in the ability to predict the timing of a recession unless there’s an event that’s right in front of us that suggests that one is imminent,” Hamrick said.
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Other experts point to the Federal Reserve’s role in steering the economy.
“When we get a recession, it tends to be because we had a problem with monetary policy,” said William Luther, director of the Sound Money Project at the American Institute for Economic Research.  
As Fed officials target a soft landing for the U.S. economy, several moving factors will continue to affect Americans’ wallets in the coming months.

1. Cooling inflation may not prompt lower prices

People stand at the check-out counter after shopping at a grocery supermarket in Alhambra, California, on July 13, 2022. 
Frederic J. Brown | AFP | Getty Images

While the U.S. economy is not in a recession, many Americans think we’re already in a downturn, various surveys show. Moreover, some people fear a downturn as severe as the Great Recession.
Blame high inflation, which has prompted prices on everyday items consumers buy to soar.
“When inflation picks up, people become more pessimistic in general,” Luther said. “The general public does not like inflation.”
Bank of America’s new projections see inflation slowing more gradually, with the Federal Reserves preferred measure for inflation — the personal consumption expenditures, or PCE — falling to 2% year over year in the second half of 2025.
While that’s going in the right direction, households will still have to play catch up, Gapen said.
“Just because inflation comes down doesn’t mean the level of these prices come down,” Gapen said. “Just the rate at which they’re rising slows.”
For example, a steak dinner that now costs $50 at a New York restaurant may rise to $52 instead of $60 as inflation slows. But the price won’t come down to $35, he said.
To recover, consumers will have to have their wages catch up to where inflation is, which could take a few years, Gapen said.

2. There may be further moderation in hiring

A sign posted outside a restaurant looking to hire workers in Miami, May 5, 2023.
Joe Raedle | Getty Images News | Getty Images

While the unemployment rate came in at 3.5% in July, that may tick up and peak at 4.3% in 2025, Bank of America projects.
“I think the labor market will continue to cool,” Gapen said. “The question is do we get large-scale layoffs? Right now, the data doesn’t support that.”
Employers have announced plans to cut 481,906 jobs in the first seven months of this year, up 203% from 159,021 cuts for the same period in 2022, according to Challenger, Gray & Christmas, Inc., a global outplacement and business and executive coaching firm.
That year-over-year percentage change for job cuts has declined steadily in recent months as companies seek other ways of cutting costs rather than letting go of workers, according to Challenger’s research.
For many employers, that means slower hiring.
The unemployment rate has been between 3.4% and 3.7% since March 2022, Hamrick noted.
While the last two recessions brought much higher unemployment rates, with 10% in October 2009 and 14.7% in April 2020, a future downturn does not necessarily have to bump joblessness up as high, he said.
“Recessions don’t always bring double-digit unemployment rates,” Hamrick said.

3. Now is the time to lock in high rates on cash

JGI/Jamie Grill

The Federal Reserve approved a new hike in July that brought interest rates to the highest levels in more than 22 years. The central bank could raise rates again before the year is over.
Bank of America expects one more 25 basis rate hike this year. However, the firm also foresees rate cuts poised to begin in June 2024. The firm’s outlook projects cuts of 75 basis points in 2024 and 100 basis points in 2025.
“The biggest risk at the moment is that the Federal Reserve will over tighten monetary policy,” Luther said. “If it is too tight, then we will have a recession.”
If the Fed overcorrects, interest rates may start coming down next year, he said.
While Hamrick said it is premature to “place a heavy bet” on rate cuts, there are strategic moves investors may want to make now, he said.
High rates have pushed the average credit card rate to 20.5%, even for well-qualified borrowers, Hamrick noted. On the flip side, savers are able to earn 3% to 5% on their savings.
“This is the time to try to bolster emergency savings while looking to achieve other financial goals like saving for retirement and paying down debt,” Hamrick said.
For people who do not need immediate access to their cash, it may be a good idea to lock interest rates in with longer-dated terms, such as with a certificate of deposit, he said. More

Life Changes

The Mega Millions jackpot has grown to an estimated $1.25 billion this week, the fourth-largest prize in the game’s history.
While states receive a chunk of every lottery ticket, the federal government doesn’t collect its share until there’s a winner, a tax expert says.
The next Mega Millions drawing is at 11 p.m. ET on Friday.

The Mega Millions jackpot grew to $1.25 billion on August 3, 2023.
Justin Sullivan | Getty Images

After months of no winners, the Mega Millions jackpot has grown to an estimated $1.25 billion this week, the fourth-largest prize in the game’s history.
If you win, there’s a choice between two pretax options: an estimated $625.3 million lump sum or a 30-year annuity worth $1.25 billion. The lottery, however, benefits more than just the lucky winner because the federal government and some states also receive a portion of the revenue.

The next Mega Millions drawing is Friday at 11 p.m. ET. The chance of winning the jackpot is roughly 1 in 302 million.

More from Life Changes:

Here’s a look at other stories offering a financial angle on important lifetime milestones.

State lottery revenue isn’t consistent

While states receive a chunk of every lottery ticket, the federal government doesn’t collect its share until there’s a winner, explained Aravind Boddupalli, research associate in the Urban-Brookings Tax Policy Center.
Roughly 65% of proceeds from lottery ticket sales go to winners, according to the North American Association of State and Provincial Lotteries. Some 6% goes to retailers, 5% covers lottery administration and 24% goes to public beneficiaries.
In 2021, states received a total of nearly $30.4 million in lottery revenue, defined as ticket sales minus prizes, according to Census data analyzed by the Tax Policy Center.
Boddupalli said the revenue typically goes into the state’s general fund but is earmarked for specific programs, such as education, infrastructure, health care, the environment and more. There’s a state-by-state list of these programs here.

“There’s a little bit of a conundrum with this, though,” Boddupalli said.
Lottery revenue isn’t as consistent as income tax revenue, which may cause program funding shortfalls.
Most states also have a mandatory upfront income tax withholding on lottery winnings, according to the Tax Foundation, which may not cover the total state and marginal rates. The top marginal rates are above 10% in some states.

Federal tax bill on a $1.25 billion Mega Millions jackpot

The federal government receives a sizable chunk of revenue after the lottery announces a winner because there’s a mandatory 24% federal withholding.
If you pick the $625.3 million lump sum, the 24% federal withholding automatically sends more than $150 million to the IRS.
However, the final bill will likely represent millions more since the windfall pushes the winner into the 37% income tax bracket.

For 2023, the 37% rate applies to taxable income of $578,126 or more for single filers and $693,751 or higher for couples filing together. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
Single lottery winners will pay $174,238.25, plus 37% of the amount over $578,125. But for couples filing jointly, the total owed is $186,601.50, plus 37% of the amount above $693,750.
Friday’s Mega Millions drawing comes about two weeks after a single ticket sold in California won Powerball’s $1.08 billion jackpot. That game’s top prize is back down to $124 million, with roughly 1 in 292 million odds of winning the jackpot. More

A new TikTok filter that has gone viral lets people get a look at their future selves.
Experts say the visual images may help inspire people to plan for their later years, even as we are hardwired to think short term.

Darya Komarova | Moment | Getty Images

‘The dots need to be connected for consumers’

Exposure to our older selves is only part of the process of making decisions for retirement, experts say.
While the TikTok filter has recently made it popular to look at our future selves, this type of application has been around since the early 2000s, said Joseph Coughlin, director of the Massachusetts Institute of Technology AgeLab.
Once people see an image of their older selves, they tend to feel differently about their future decisions.  Whether those effects will last six months or a year from now is uncertain, he said.
Successful, lasting behavioral changes typically come with incentives to work toward, such as saving money or exercising, Coughlin said. But once the incentives stop, the behavior often does as well, he said.
Pairing the videos with prompts to save more money or invest more toward retirement may be effective, according to UCLA’s Hershfield. Otherwise, it’s unlikely people will separately take the initiative to log into their accounts and make financial changes, he said.
“The dots need to be connected for consumers, especially given how many other things that they have to think about,” Hershfield said. 

Other research shows we may be hardwired to think short term. 
Many people have a self-control bias, which means they are wired to be “spenders rather than savers,” said Victor Ricciardi, a visiting finance professor at Ursinus College and co-author of the book, “Advanced Introduction to Behavioral Finance.”
Different types of personalities can also come into play when it comes to saving. For instance, a person who is more of a planner or analytical thinker in their daily lives is more likely to think about their future self, versus someone who takes more risks, Ricciardi said.
Moreover, seeing their older selves may prompt some people to focus more intently on living for today, said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. She is also a member of the CNBC FA Council.
But that approach may backfire when someone does reach retirement age.
On the flip side, research shows that if people make emotional connections and think about the money they will spend in the future, it will help incentivize them to save, said Ricciardi.

Ways to incentivize yourself to plan for the future

Drazen Zigic | Istock | Getty Images

The good news is that planning for “future you” now can pay off substantially in the long run. 
Just about a quarter of why someone dies at a given age is due to genetics, according to McClanahan, who is also a physician. The rest is mostly lifestyle.
“The best way to prepare is always keep yourself physically in good shape,” McClanahan said.
Additionally, when it comes to money, the earlier you start, the more you will benefit from compound interest — whereby the money you earn gets reinvested and earns even more.
Here are three ways to make smart decisions that benefit you now and in the future.
1.  Focus on creating financial flexibility. Rather than focusing on retirement, think of saving as a way to give you more choices in the future, McClanahan suggested.
2. Pay attention to how much you spend. If you have a high-cost lifestyle that will not only cost more now, but will also require you to save more towards retirement, McClanahan said.
3. Think of yourself doing everyday activities. To be more inspired to plan for your future self, it helps to realistically picture who that person will be and what they will need, Coughlin said. Ask yourself how your older self will approach everyday things like who you will have lunch with or how you will get an ice cream cone. “Sometimes your goals are simple and the things that make you smile, Coughlin said. More

Even as transactions get increasingly cashless, there’s still a place for paper currency — especially when it comes to guilty pleasures.
Cash makes it easier to forget a transaction ever happened, according to new research by Stanford professor Szu-chi Huang.

Nopphon Pattanasri | Istock | Getty Images

A cashless society is nearly within reach.
After years of reluctance, Americans finally abandoned paper currency during the pandemic in favor of “tap and go” transactions and have now almost entirely embraced contactless and digital payment methods. Cashless payment volumes are only expected to increase going forward, according to a recent report by PwC. 

However, there’s still a hidden advantage to making purchases with cash, new research found, especially if you want to forget the transaction ever happened.
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Consumers pay with credit cards to remember and cash to forget, according to a paper by Szu-chi Huang, associate professor of marketing at Stanford Graduate School of Business.
When shoppers are motivated to forget a purchase because it is difficult to justify, they are more likely to use cash rather than a credit card, the analysis of more than 118,000 real-world purchases found, because cards create a “paper/electronic trail” that “aids memory retrieval.”
Paying with cash also works well when it comes to hiding purchases from a partner or spouse, according to a separate report by Bankrate.com. “Cash is more anonymous,” said Bankrate’s credit card analyst Ted Rossman.

It’s more common than you think: One-third of Americans admit they have committed some form of financial infidelity, according to another survey. Most often, they are spending more than they feel their significant other would be comfortable with. Others have a secret account or credit card or some sort of hidden debt.

The pros and cons of cash

On the upside, paying with cash can be a smart move for those trying to stick to a budget.
Most experts recommend using the envelope method, or “cash stuffing,” to stay disciplined. In this case, spending money is divided up into envelopes representing your monthly expenses, such as groceries and gas. When the money in one envelope is spent, you’re either done spending in that category for that month, or you need to borrow from another envelope, Rossman explained.
“Adhering to this approach keeps you from going into credit card debt,” he said.
But paying with cash forgoes the rewards and protections that come with credit.

There are some grocery rewards cards that can earn you as much as 6% back at supermarkets, while a generic cash-back card will earn you 2%. Further, there are also federal mandates to protect you when you use your credit card if, for example, you never receive an item you’ve paid for.
And then there is the added security of contactless and digital payment methods, such as Apple Pay.
They are embedded with a near-field communication antenna that can be used for proximity payments via radio waves. There is also a dynamic cryptogram, or code, which is unique for each individual transaction.
This is similar to chip cards’ smart technology, also known as EMV, which can process card transactions with embedded smart chips — except it is much faster.
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Congress made free school meals available to all children, regardless of family income, during the Covid-19 pandemic.
However, the policy was not renewed for the 2022-23 school year.
Nine states have passed legislation to bring back free school meals for all, according to Food Research & Action Center data.

Jgi/tom Grill | Tetra Images | Getty Images

Some states are reestablishing a federal pandemic-era policy that offered free school meals to all kids, and most of them are doing so on a permanent basis.
Before the Covid-19 pandemic, students qualified for free or reduced-price school breakfasts and lunches based on their income. The federal government expanded that policy in March 2020, allowing schools to provide meals at no cost to all students, regardless of income.

That expansion was in place for the 2020-21 and 2021-22 school years. About 90% of U.S. school districts participated, according to the U.S. Department of Agriculture. However, Congress didn’t extend the policy for the 2022-23 school year.
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Nine states have passed legislation to bring back free school meals for all, according to Food Research & Action Center data. Seven of them — California, Colorado, Maine, Michigan, Minnesota, New Mexico and Vermont — have made the policy permanent, according to FRAC. Nevada did so on a temporary basis for the 2023-24 school year.
The Massachusetts Legislature passed a budget bill Monday that would permanently fund a universal free-meal program. Gov. Maura Healey is expected to sign the measure into law.  

The state laws are a direct response to the end of the federal free-meal waivers, experts said. The policies affect K-12 students, though some extend to prekindergarten, too, they said.

Pandemic offered a ‘trial run’ for free meals

“The pandemic was a trial run and it worked,” Crystal FitzSimons, FRAC’s director of school and out-of-school time programs, said of the universal free school meals.
Among other successes, the program alleviated pressure on household food budgets, FitzSimons said.
The average household with two school-age children pays $162 a month — $1,458 per year — for full-price school breakfasts and lunches, according to an Agriculture Department report issued last month. That expense is more than households’ average electricity bill at $122 a month in 2021, the report said.

The USDA analysis was based on meal costs in the 2016-17 school year, when schools charged an average $1.48 and $2.57 for full-price breakfasts and lunches, respectively.
Inflationary pressures have since pushed up prices in many school districts, which have contended with higher costs for food and labor, said Diane Pratt-Heavner, a spokeswoman for the School Nutrition Association.
During the most recent school year, the typical K-12 student paid between $1.73 and $1.80 for a full-price breakfast and between $2.75 and $3 for lunch, according to the School Nutrition Association. The price range reflects the different costs for elementary, middle and high school students.
Since local school districts set their own prices, they can “vary widely” across the country, the School Nutrition Association said.

Loss of free meals may lead to hardship

In 2021, the National School Lunch Program provided 2.2 billion meals, about 99% of which were at a free or reduced price, according to USDA data. By comparison, 74% of meals were at a free or reduced price in 2019.
Students pay 30 cents and 40 cents, respectively, for reduced-price breakfasts and lunches.
The expiration of federal free-meal waivers for all students may potentially contribute “to the financial hardship of some households” at a time when inflation has led to an increase in the cost of living, wrote Saied Toossi, a USDA agricultural economist.
Kids from “food-insecure and marginally food-secure” households are more likely to eat school meals, according to the USDA.

Sdi Productions | E+ | Getty Images

Nearly two dozen other state legislatures are working to pass bills to extend the pandemic-era relief, according to FRAC.
In the meantime, families in the 41 states without a free-meal-for-all policy must apply for free or reduced-price school meals, as was the case before 2020.
Children qualify for free meals if their household’s income is 130% of the federal poverty level or lower. For the 2023-24 school year, that amounts to $39,000 or less for a family of four, according to the School Nutrition Association.
They’re eligible for reduced-price meals if their household income is between 130% and 185% of the poverty line, or up to $55,500 for a family of four.
Families with higher incomes must generally pay full price. More

The IRS has unveiled plans to offer digital correspondence for the 2024 season and aims to offer “paperless processing” for tax returns in 2025.
It’s expected the plan will eliminate up to 200 million pieces of paper every year, slash processing times by half and speed up refunds by several weeks.
“This is truly a game-changer for the IRS,” said Eric Hylton, national director of compliance for Alliantgroup.

Valentinrussanov | E+ | Getty Images

The IRS has unveiled plans to offer digital correspondence for the 2024 tax season, building on the agency’s decade-long overhaul of improved service, technology and compliance.
By 2025, the agency aims to achieve “paperless processing” for tax returns and so-called information returns, used by employers and financial institutions.

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The IRS expects to eliminate up to 200 million pieces of paper every year, slash processing times by half and speed up refunds by several weeks, the U.S. Department of the Treasury announced on Wednesday.
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The IRS currently receives 76 million paper tax returns and forms every year, along with 125 million pieces of correspondence, responses to notices and other forms, which have delayed service and added to backlogs. The agency also spends about $40 million every year to store 1 billion “historical documents.”
“This paperless processing initiative is the key that unlocks other customer service improvements,” Treasury Secretary Janet Yellen said in a speech on Wednesday. “It will enable taxpayers to see their documents, securely access their data and save time and money.”

She said these changes will expedite refunds, reduce tax processing errors and deliver “a more seamless and responsive customer service experience.”

While taxpayers will still have the option to send paper returns in 2025, the agency is committing to digitally process 100% of tax and information paper filings, as well as half of paper correspondence, non-tax forms and responses to notices, Yellen said.

The initiative is a ‘game-changer’ for the IRS

“This is truly a game-changer for the IRS,” said Eric Hylton, national director of compliance for Alliantgroup. “I think this is going to push the organization forward tremendously.”
However, the agency needs to allocate more funds for improved technology to meet these goals, said Hylton, who is a former IRS commissioner for the agency’s small business and self-employed division.

This is truly a game-changer for the IRS.

Eric Hylton
National director of compliance for Alliantgroup

Charles Rettig, former IRS Commissioner and board member of K1X, a digital platform for Forms K-1, described the agency’s processing initiative as a “win-win” because it will preserve “limited human resources” and allow IRS employees to focus on other service areas.
The initiative also has support from the American Institute of CPAs, which has pushed for these changes.
“We are optimistic that these steps will lead to reduced processing times and better experiences overall for taxpayers,” said Peter Mills, senior manager for tax policy and advocacy with AICPA.
The new plan comes amid continued debate over IRS funding. House Republicans in January attempted to strip the $80 billion approved by Congress in 2022, but the bill halted without sufficient Senate and White House support. In May, lawmakers agreed to rescind $21.4 billion as part of the debt ceiling deal.   More

President Joe Biden’s second plan to forgive student debt may involve fewer borrowers than his first attempt.
The Supreme Court ruled the president didn’t have the authority to broadly clear people’s balances.

President Joe Biden speaks at the White House on June 30, 2023.
Bloomberg | Bloomberg | Getty Images

First plan excluded a small share of borrowers

At an estimated cost of about $400 billion, Biden’s first student loan forgiveness plan would have been among the most expensive executive actions in history. Around 37 million people were slated to benefit.
Just a small share of borrowers were excluded.
In terms of income, only those who earned more than $125,000 per year, or married couples making over $250,000, were left out. The vast majority of people with student debt fall under those thresholds.

Biden officials were also looking at earning years 2020 and 2021, when many people saw their income take a hit because of the coronavirus pandemic.
In the end, the Supreme Court rejected the Biden administration’s argument that its sweeping aid was a necessary measure amid a national emergency.
″’Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” wrote Chief Justice John Roberts in the majority opinion for Biden v. Nebraska, referring to U.S. Secretary of Education Miguel Cardona. “We can’t believe the answer would be yes.”

Only those struggling the most may be eligible

In an effort to avoid another failure at the Supreme Court, Biden may look to cancel debt only for people in distressed financial situations, according to Herrine.
“Not sort of broadly for everyone under a certain income level, but for those who’ve been paying for too long, or with a repeated default,” he said.
A quarter of federal student loan borrowers — or more than 10 million people — were in delinquency or default prior to the pandemic, noted Kantrowitz.
And there is another reason fewer people may qualify this round.

Unlike Biden’s first attempt to forgive student debt quickly through an executive order, this time he’s turning to the rulemaking process. That route can come with more limitations, Kantrowitz said.
“Biden’s plan for student loan forgiveness may need to be scaled back to comply with statutory restrictions,” he said.
For example, it may turn out that only borrowers who can demonstrate they won’t be able to repay their student debt in a reasonable amount of time will be eligible.
“It remains to be seen what approach they take and whether it will survive the court challenges,” Kantrowitz said. More

The Social Security Administration Office of the Inspector General recently sounded a new warning about A.I. and the potential for new benefits fraud.
A.I. may “make fraudulent schemes easier and faster to execute, the deceptions more credible and realistic,” one government official recently wrote.
In light of those risks, experts say there are steps consumers can take to protect their personal financial information.

Courtney Keating | E+ | Getty Images

While scrolling social media, you may find a video of President Joe Biden urging you to sign up for extra Social Security benefits for which you are eligible.
While the hypothetical video may seem real, the promise of extra benefits is not.

It’s one example of the ways in which artificial intelligence may prey upon Social Security beneficiaries, according to Kathy Stokes, director of fraud prevention at AARP’s Fraud Watch Network.
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An unexpected communication can put anyone in a heightened state of emotion — and make them more susceptible to falling for such a scheme, she said.
If you divulge your personal information, you may be putting it in the hands of criminals who may redirect your monthly Social Security benefits to another account that is not yours.
“We’re in this world where everything looks legitimate, but we can’t trust anything,” Stokes said.

A.I. fraud ‘easier and faster to execute’

Artificial intelligence is generated by machines or software. Examples include ChatGPT, a chatbot enabled to have human-like conversations; deep fakes, phony audio or video made in someone’s likeness; and generative A.I., which can create text or other media responses.
A.I. “will impact society in ways the public and private sectors are just beginning to understand,” Gail Ennis, inspector general at the Social Security Administration Office of the Inspector General, wrote in a July letter to the agency.
Yet it’s “imperative” to recognize the technology’s potential risks, according to Ennis.
“The OIG understands criminals will use A.I. to make fraudulent schemes easier and faster to execute, the deceptions more credible and realistic, and the fraud more profitable,” Ennis wrote.
The OIG has established an internal task force to study A.I. The goal is to determine the resources needed to prevent A.I.-related fraud, as well as to find out how to best use A.I. in the agency’s oversight efforts.

The new initiative is already behind the curve, according to Haywood Talcove, CEO of the government business of LexisNexis Risk Solutions.
“You don’t have years, months or weeks to study this, because it is here right now,” Talcove said. “The criminals post pandemic are focused on government payments.”
There are several reasons for that, Talcove said. For example, it’s easy, there’s “virtually zero” probability of getting caught and the government never runs out of money.
What’s more, criminals are following government agencies as closely as beneficiaries, he said, by checking their web pages, reading blogs and generally trying to find as many vulnerabilities as possible.

You don’t have years, months or weeks to study this, because it is here right now.

Haywood Talcove
CEO of the government business of LexisNexis Risk Solutions

Social Security has long been susceptible to identity fraud and theft of benefits, noted Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare.
A.I. fraud is the modern version of people having their checks stolen from their mailboxes every month, she said.
For the Social Security Administration, working to combat the new threats will pose a unique challenge after the agency has been underfunded for decades, Freese said.
“It’s going to have to be expensive and it’s going to have to be an ongoing effort,” Freese said. “They need money to be able to deal with it.”

3 features may be found in some 85% of scams

Boonchai Wedmakawand | Moment | Getty Images

Consumers should be on high alert for signs of fraud, AARP’s Stokes said.
That includes particularly watching for communication that comes out of the blue, puts you in a heightened emotional state and involves urgency, she said.
“Those three things together are what is the sign of probably 85% of scams,” Stokes said.
It’s also important to recognize that anyone — young or old — may easily fall for these sophisticated schemes, she said.
“When we’re in that heightened emotional space in our brains, it’s really hard to access logical thinking,” Stokes said.
Other steps can also help protect your personal financial information and Social Security beneficiaries’ monthly income, according to Talcove.

First, be sure to trace your credit at all three credit bureaus. Better yet, lock your credit so it is not accessible, Talcove said.
“One of the assumptions you can always make is your information has already been stolen,” Talcove said.
Next, Social Security beneficiaries should notify the agency to contact them if the information tied to the bank account where their benefits are deposited changes, he said.
Additionally, everyone should change their their online Social Security password every month.
“I can’t imagine what it would be like to be elderly and have to try to get through that system if my benefits were stolen,” Talcove said.
“It’s going to be the silent giant unless we address it,” he said of potential criminal activity that can take place. More