Personal Finance

Climate change may cost Americans born in 2024 nearly $500,000 in lifetime

Published

9 months ago

April 26, 2024

Business Finance News

A man stands outside his flooded home after heavy rain in Fort Lauderdale, Florida, on April 13, 2023.

Chandan Khanna | AFP | Getty Images

The warming planet is already proving expensive.

U.S. weather and climate disasters cost more than $617 billion between 2018 and 2022 — a record figure, according to the U.S. Department of the Treasury. The October report found that around 13% of Americans reported economic hardship over the prior year due to climate change.

More people are likely to experience financial pain as temperatures climb and extreme weather events become more common, experts say.

With each additional degree of warming, the U.S. is expected to take a bigger economic hit, the Fifth National Climate Assessment warns. For example, an increase in global temperatures by 2°F is anticipated to double the financial impact induced by 1°F of warming.

Climate change could cost Americans born in 2024 nearly $500,000, due to higher taxes and pricier housing and food, among many other factors, ICF, a consulting firm, recently found in a report commissioned by Consumer Reports.

“The basic building blocks of our financial lives — housing, insurance, social welfare programs, taxes — will become more expensive or less valuable due to climate change, with lots of consequences for people’s wallets,” said Andrew Rumbach, a senior fellow at the Urban Institute.

‘Climateflation’ is already affecting prices

‘Household wealth is tied to housing’ — and that’s risky

A destroyed house following Hurricane Ian in Fort Myers Beach, Florida, US, on Tuesday, Oct. 4, 2022.

Eva Marie Uzcategui | Bloomberg | Getty Images

Some of the biggest financial risks of climate change come into play with housing, Wagner said.

“Most household wealth is tied to housing, which [is] directly affected by everything from floods to droughts to wildfires,” he said.

At least 3 million Americans already report being displaced by a disaster, one survey by the U.S. Census Bureau found.

“That is tremendously costly for people and businesses,” Urban Institute’s Rumbach said.

Insurance companies are raising their monthly premiums on homeowner policies and rolling back coverage in areas prone to certain disasters to “adjust to climate risk,” he said.

“Florida, Louisiana and California are all facing severe challenges, and I expect these issues will spread to other states in the years ahead,” Rumbach said.

Globally, natural catastrophes cost insurers $108 billion in 2023, which is well above the annual average over the past 10 years of $89 billion, according to Swiss Re Institute. The institute estimates these losses could double within the next decade, as temperatures rise and storms intensify.

These costs are likely to be passed on to consumers, Rumbach said.

Currently, only around 40% of the expenses from natural catastrophes are covered by insurers, meaning the rest falls on governments and individuals, Swiss Re Institute found.

‘Clear interactions’ between climate and health

The warming planet could result in larger medical bills for many Americans.

Health-care costs due to fossil fuel pollution and climate change already exceed $800 billion a year in the U.S., a report by the Natural Resources Defense Council found.

Some of these expenses are a direct result of individual, dangerous disasters.

For example, Hurricane Sandy, which pounded the mid-Atlantic region in 2012, led to more than 12,000 hospital admissions, emergency room visits and outpatient encounters.

Damage is seen in the Breezy Point area of Queens in New York on October 30, 2012 after fire destroyed about 80 homes as a result of Hurricane Sandy which hit the area on October 29.

Stan Honda | AFP | Getty Images

Other health effects of climate change reflect more widespread shifts in global conditions.

“There are clear interactions between heat waves and health conditions,” said Charles Driscoll, a professor at Syracuse University who studies climate change. “For example, heat waves exacerbate cardiovascular events.”

Air pollution, for its part, is associated with respiratory diseases, cancer and nervous system disorders, Driscoll added.

Knock-on effects for taxes, wages, retirement savings

Federal, local and state governments will likely raise taxes as they deal with the higher costs of a hotter planet and more demand for their services.

At the same time, workers may see their wages shrink as businesses and communities are disrupted by storms and heat waves. Within seven years, up to 3.8% of total working hours around the world could be lost due to higher temperatures, according to the International Labour Organization. That amounts to roughly 136 million full-time jobs.

More than 65 million adult workers in the U.S. are in occupations endangered by climate-related health risks, KFF, formerly the Kaiser Family Foundation, estimated in a July 2023 analysis. These include fields with increased exposure to heat and decreased air quality, including construction and agricultural jobs.

ICF, the consulting firm, warns that global warming could put people’s retirement savings in jeopardy, too.

“Climate change is expected to decrease retirement income by impacting the value of corporate stocks held in retirement portfolios through higher costs to companies, declines in corporate productivity, damages to physical assets and supply chains, reduced resource availability and new costs associated with transitioning to low-carbon solutions,” it wrote.

A new economy in a hotter planet

The Woolsy fire burns a home near Malibu Lake in Malibu, Calif., Friday, Nov. 9, 2018.

Ringo H.W. Chiu | AP

The workforce and education system are changing in anticipation of a hotter planet.

People are switching careers to leave fields threatened by global warming, such as gas and coal, while a small number of colleges are offering a new major: climate change studies.

Schools that offer such majors “are reporting a big increase” in demand, said higher education expert Mark Kantrowitz.

Meanwhile, the number of jobs in climate science is expected to grow by 6% between 2022 and 2032, compared to an average 3% for all occupations, the Bureau of Labor Statistics found.

“Slowing down and stopping climate change is a challenge, but also an opportunity for tremendous innovation and economic growth,” Urban Institute’s Rumbach said.

Climate change leads to droughts, which lead to crop failures, which cause food price spikes.

Gernot Wagner

a climate economist at Columbia Business School

In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.

We start with a story by reporter Greg Iacurci on how people continue to build in and move to Miami, despite the city being, in the words of one expert, “ground zero” for global warming. This dynamic is playing out across the country, and could worsen the financial pain ahead.

Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at [email protected].

Personal Finance

‘Era of the billionaire.’ Here’s why wealth accumulation is accelerating

Published

4 minutes ago

January 22, 2025

Business Finance News

President-elect Trump's cabinet to have more billionaires than any in history

The rich are getting richer.

The combined wealth of the world’s most wealthy rose to $15 trillion from $13 trillion in just 12 months, according to Oxfam’s latest annual inequality report — notching the second largest annual increase in billionaire wealth since the global charity began tracking this data.

Last year alone, roughly 204 new billionaires were minted, bringing the total number of billionaires to 2,769, up from 2,565 in 2023, the global charity found.

“Not only has the rate of billionaire wealth accumulation accelerated — by three times — but so too has their power,” Oxfam International’s Executive Director Amitabh Behar said in a statement Sunday.

“We’ve reached a new era now, we are in the era of the billionaire,” said Jenny Ricks, general secretary of the human rights group Fight Inequality Alliance. “The challenge now is turning this around and making this the era of the 99%.”

Despite the fact that America ranks first as the richest nation in the world in terms of gross domestic product, 36.8 million Americans live in poverty, accounting for 11.1% of the total population, according to the latest report from the U.S. Census Bureau.

“We need government serving people’s real needs and rights,” Ricks said, with increased funding for education and healthcare, among other social services.

‘Tax us, the super rich’

After Oxfam’s report was released, some of the world’s wealthiest people called on elected representatives of the world’s leading economies to introduce higher taxes on the very richest in society.

In an open letter to political leaders attending the annual World Economic Forum in Davos, Switzerland, more than 370 billionaires and millionaires said that they wanted to “tackle the corrosive impact of extreme wealth.”

To that end, “start with the simplest solution: tax us, the super rich,” the letter said.

36% of billionaire wealth is inherited

Oxfam found that 36% of billionaire wealth is now inherited. Much of that wealth will also get handed down. A separate report by UBS found that baby boomer billionaires’ heirs stand to inherit an estimated $6.3 trillion over the next 15 years.

“As the great wealth transition gains momentum … we expect the proportion of multigenerational billionaires to increase,” the report said.

According to Oxfam’s analysis, half of the world’s billionaires live in countries with no inheritance tax for direct descendants.

In the U.S., there is a federal estate tax up to 40%, depending on the amount of the estate over the current exclusion limit.

In 2025, the basic exclusion amount rose to $13.99 million per person, up from $13.61 million in 2024.

Meanwhile, President Donald Trump has vowed to fully extend the trillions in tax breaks he enacted via the Tax Cuts and Jobs Act in 2017, which also doubled the estate and gift tax exemption.

After 2025, the higher estate and gift tax exemption will sunset without action from Congress. If the provision expires, the exclusion will revert to 2017 levels, adjusted for inflation.

Some Democrats have pushed back on TCJA extensions, noting that they disproportionately benefit the wealthy, rather than middle-class families.

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Personal Finance

Here’s what you need to know about financial influencers

Published

2 hours ago

January 22, 2025

Business Finance News

Jaap Arriens | Nurphoto | Getty Images

TikTok’s fate is still uncertain.

While the Supreme Court last week upheld the law that effectively bans TikTok from the U.S., one of Trump’s first actions as president was an executive order to pause the ban for 75 days, starting Jan. 20.

The app’s future may shift how young adults learn about personal finance. Gen Zers, or those born between 1997 and 2012, often rely on TikTok’s financial community, or #FinTok, as a source of information about money.

A 2024 report by the CFA Institute found that the generation is more likely than older generations to engage with “finfluencer” — or financial influencer — content on TikTok, YouTube and Instagram, in part because they have less access to professional financial advisors and a preference for obtaining information online.

Americans last year turned to TikTok for financial advice on topics including budgeting (25%), investing (24%), credit cards and credit scores (33%), according to a recent report by Chime, a financial technology company.

The site polled 2,000 U.S. adults from November 1 to 16. It also analyzed user engagement patterns on TikTok compared with data from platforms like Google Trends and Exploding Topics, which track popularity and growth of trends over time.

Leading up to the law’s initial Jan. 19 deadline for TikTok, finfluencers had been directing their followers to other platforms like Instagram and YouTube. Individuals also downloaded social media apps like RedNote as TikTok substitutes.

But whatever ends up happening with TikTok, finfluencers are here to stay. Here’s how to vet their advice.

The value of financial advice on TikTok

About 65% of respondents in Chime’s survey said they feel more financially secure since using TikTok. Another 68% say #FinTok has improved their financial situation at home.

“For 2025, TikTok users are gravitating toward digestible personal finance tips that incorporate budgeting apps, micro-investing and community-based saving challenges,” said certified financial planner Douglas Boneparth, president and founder of Bone Fide Wealth, a wealth management firm based in New York City that focuses on millennials, young professionals and entrepreneurs.

Some viral TikTok trends are worth applying to your finances in 2025, like “loud budgeting,” experts say. The trend encourages consumers to take control of their finances and be vocal about making money-conscious decisions rather than overspending.

Essentially, “loud budgeting is just financial boundaries,” financial therapist Lindsay Bryan-Podvin, author of “The Financial Anxiety Solution” and founder of Mind Money Balance.

A short-term, no-spend challenge can also be an opportunity to do a “gut check on where you’re spending and where you’re saving,” Bryan-Podvin said.

TikTok 'refugees' stream to Chinese app RedNote

“These trends are worth adopting if you verify the underlying strategies [… and] modify them to align with your personal financial goals and risk tolerance,” said Boneparth, who is a member of the CNBC Financial Advisor Council.

But a lot of incorrect or risky advice appears on social media, too. About 27% of social media users believed misleading financial advice or misinformation on social media, according to Edelman Financial Engines. About 42% of surveyed adults in their 30s have fallen prey to bad financial advice in social platforms, and 2 in 10 have been affected more than once, the report found.

Edelman polled 3,008 adults of ages 30 and up from June 12 to July 2024. The total sample included 1,500 respondents between ages 45 and 70 with household assets between $500 and $3 million.

Vet financial content and find other sources

It’s important for social media users to be cautious about the content that influencers share, experts say.

“There’s really no barrier to entry for [an] influencer to participate on a platform,” said CFP Brian Walsh, head of financial planning advice at SoFi, a personal finance and financial planning technology company.

While social media helps people easily access information and get unique insights, it can be concerning when it comes to information you’d apply to your personal finances, he said.

“There’s nothing stopping someone with a ton of followers from promoting something that’s completely wrong,” Walsh said.

Individuals who are affected by risky or incorrect advice they took from a social media creator can file a complaint with the Consumer Financial Protection Bureau, according to Amy Miller, an accredited financial counselor and manager of America Saves, a campaign managed by the Consumer Federation of America.

Otherwise, here are three key steps to consider:

1. Look for other sources of other information

In most instances, you might not find experienced financial advisors on TikTok like on other social platforms, according to Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners.

Much of it has to do with compliance rules. In order for financial planners to maintain their licensing, they must adhere to certain guidelines on what information they’re allowed to share. It’s easier to track and review content posted on some platforms — TikTok isn’t one of them.

“I’m not allowed to share information on TikTok,” said Sun, who is also a CNBC FA Council member.

You can typically find licensed financial professionals actively sharing content on platforms like LinkedIn, YouTube and X, she said.

It’s also “absolutely crucial” to develop a basic level of financial literacy before turning to social media for advice, said SoFi’s Walsh.

Look for online courses, join financial forums and subscribe to legitimate publications to gain financial literacy, experts say. Organizations like the Consumer Financial Protection Bureau also provide free educational resources.

2. Do a background check on the content creator

Search for designations and look up the creator’s background, Walsh said: “The CFP [certified financial planner designation] is really the baseline when it comes to financial planning.”

You can enter the content creator’s name on BrokerCheck to see if they have any credentials. If they are accredited, find out if they have any disclosures, a red flag which means they’ve gotten into trouble in the past.

3. Verify the advice

If the content creator is not actively in the financial industry or lacks accreditation altogether, be careful about what they say. Be cautious if they are promising quick results and if they speak in absolutes, SoFi’s Walsh said — it can take a long time to save for an emergency, pay off credit card debt or learn how to invest.

“So promising get rich quick or overnight sensations […] that’s a big red flag for me,” Walsh said.

Also be careful if a creator talks about how one product or solution can answer all of your problems, he explained.

Outside of the basics like spending less than you make and saving money, there are “very few absolutes,” Walsh said.

Cross-reference an influencer’s claims with sources like government regulators and content from reputable financial professionals and publications, Boneparth said. If you need personalized advice, consider reaching out to a certified financial planner, a tax professional or a licensed investment advisor, he said.

Personal Finance

Some investors can file taxes for free in 2025. Here’s who qualifies

Published

4 hours ago

January 22, 2025

Business Finance News

Rockaa | E+ | Getty Images

There’s less than a week until tax season kicks off on Jan. 27 — and investors may have more options to file returns for free than in previous years.

Typically, investors need certain tax forms to file returns, including Form 1099-B for capital gains and losses and Form 1099-DIV for dividends and capital gains distributions. Form 1099-INT covers interest income from savings accounts, certificates of deposit, Series I bonds, Treasury bills and more.

Plus, retirees may receive Form 1099-R for withdrawals from 401(k) plans, individual retirement accounts, pensions and other distributions.

Here are three free tax filing options to consider this season, depending on your situation.

1. IRS Direct File

This season, IRS Direct File, the agency’s free filing program, has expanded to 25 states. It covers more than 30 million taxpayers across eligible states, according to U.S. Department of the Treasury estimates.

“We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year,” former IRS Commissioner Danny Werfel said in a press release in October.

During the pilot in 2024, the program covered simple returns, including filings with interest of $1,500 or less. But for the 2025 filing season, the program supports interest above $1,500 and Alaska residents who receive the Alaska Permanent Fund dividend.

The program doesn’t currently cover other investment income, including capital gains and dividends.

Starting in March, Direct File will also support distributions from most company retirement plans, such as 401(k) plans, pensions and more. But you can’t use the service if you withdrew funds from an IRA.

2. IRS Free File

Another option, IRS Free File, is a public-private partnership between the agency and the Free File Alliance, a nonprofit coalition of tax software companies.

This season, you can use IRS Free File if your adjusted gross income, or AGI, was $84,000 or less in 2024.

Eight software partners will accept the most commonly used tax forms and schedules, explained Tim Hugo, executive director of the Free File Alliance. Those include Schedule B for interest and ordinary dividends and Schedule D for capital gains and losses. These Schedules cover investing forms, such as 1099-INT over $1,500 and certain items from Forms 1099-B and 1099-DIV.

“It really is a great tool that can serve millions of Americans that just nobody knows about,” Hugo said.

3. Volunteer Income Tax Assistance

If your want more guidance, you may also qualify for free tax prep from Volunteer Income Tax Assistance, or VITA, a program managed by the IRS.

For the 2025 season, you’ll qualify for VITA with an adjusted gross income of $67,000 or less.

The program’s scope includes coverage for investors, including Forms 1099-INT, 1099-B and 1099-DIV, with certain limitations. VITA also covers Form 1099-R for retirement income with some exclusions. The program won’t cover cryptocurrency transactions for 2024 filings.