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Retire Better: Why older Americans need to pay special attention to what’s going on with the coronavirus

I’ll get to what the coronavirus means for your money in a second.

But first, here are a couple of disturbing things that I think are very important for you to know. Anthony Fauci, the immunologist who has been head of the National Institute of Allergy and Infectious Diseases since 1984, testified before Congress yesterday that things are going to get worse. I’ve been talking on and off with Fauci for years. He is a man of the highest caliber, intelligence and integrity, and when he says something you can—and should—believe him. Period.

So how much worse could it get? One possible scenario comes from Brian Monahan, the attending physician of Congress and the U.S. Supreme Court—who told Congressional staffers this week that he expects 75 to 150 million Americans to contract coronavirus.

If you were to apply the death rate that South Korea has reported from the virus — 0.6% — to that, it implies 450,000 to 900,000 deaths in the United States before this is all over.

But the World Health Organization — which Wednesday classified coronavirus as a pandemic — estimates the global death rate at a far higher 3.4%. Unthinkable and stunning as it may be, calculate 3.4% of 75 or 150 million — and, you get a disaster of human proportions the likes of which this country has never seen.

This are dangerous and frightening scenarios, and we must be deadly serious about what may lie ahead.

I’m not finger pointing at anyone or anything. We’re all in this together and only by working together — can we please stop squabbling about every single thing? — we can minimize the coming and inevitable damage. Take this seriously. Avoid crowds. Wash your hands frequently — including your fingertips — and consult your doctor if you feel the need.

Perhaps this makes the next topic — money — a bit less disturbing to discuss. Even so, the coronavirus crisis has already inflicted deep financial pain. Stocks are down more than 20%—the bear market I warned about in late January has arrived. Everyone’s losing money, and the danger for older Americans is that there’s less time to recover from a major selloff.

Read: Retiree warning: History suggests we’re overdue for a bear market

What to do?

As usual, keep calm. Much depends on your age, investment expectations, tolerance for risk and so forth. If you’re still working, you may have to work longer. If you’re out of the workforce, you may have to go back, at lest part time, to generate some cash. As usual, I always advise you to discuss this with a trusted financial adviser, and it you’re not working with one now, it’s a good time to start.

Meantime, the Federal Reserve has cut interest rates in a bid to prop up the economy, which many analysts now say is about to plunge into a recession. Consumer spending is two-thirds of the U.S. economy, but I’m not sure how slashing the fed-funds rate is going to sell airline tickets, book cruises or get people to eat out. I do know this, however: It’s going to mean less monthly income for retirees whose investments are tied to rates. And there’s talk among policy makers, including President Trump, that rates need go even lower.

Frankly, there’s not much more room to cut.

So a double whammy: Plunging markets SPX, +3.21%, rock-bottom interest rates. Everyone’s feeling the pinch. How are you going to generate cash? As I write this, CD rates are about 1.85%, and when you factor inflation in, it’s pretty much a wash. Meantime, health care costs are going up, and President Trump told a Fox News town hall last week that “we’ll be cutting” entitlement programs if he’s re-elected.

I can’t sugar coat it: These are difficult days, and I expect that the struggles of many people may get worse. We’re facing two intertwined crises simultaneously: a global pandemic, the likes of which we have not seen in a century, when an influenza epidemic killed about 675,000 Americans (about six-tenths of 1% of the population). We’re also facing what seems likely to be our first recession in a decade.

How long it lasts and how deep it will be is uncertain. I wish you and your family well.