Month: February 2021

Why Early 401(k) Withdrawals Are a Bad Idea

Mary Pat Campbell

Link: https://knowledge.wharton.upenn.edu/article/why-early-401k-withdrawals-are-a-bad-idea/

Excerpt:

Wharton Business Daily: What are your thoughts on the move by Congress to allow people to be able to dip into their 401(k) accounts? You are not a fan of that idea in general.

Olivia Mitchell: That’s true. This got started in March 2020, when the CARES Act was passed by Congress, allowing people who had 401(k) accounts and who were younger than age 59.5 to access up to $100,000 from their retirement accounts without paying the 10% penalty. Congress permitted this in the throes of COVID and then they allowed the income taxes on those withdrawals to be spread over three years unless the money was repaid to the account. That option ended in December 2020.

Congress passed a new bill in December that did not extend penalty-free access to everyone, but it did permit people who experienced federally declared disasters, aside from COVID, to withdraw some of their 401(k) money. So, there are still eligible people who, in 2021, can withdraw up to $100,000 from their retirement accounts without penalties. Again, they can spread it over three years for tax purposes. In general, this is not a good idea.

Author(s): Olivia S. Mitchell

Publication Date: 23 February 2021

Publication Site: Knowledge @ Wharton

2020 Excess Deaths in the US general population by Age and Sex

Mary Pat Campbell

Link: https://www.soa.org/resources/research-reports/2021/excess-deaths-gen-population/

Report link: https://www.soa.org/globalassets/assets/files/resources/research-report/2021/excess-deaths-gen-population.pdf

Graphic:

Excerpt:

Excluding the first two and a half months of 2020 before COVID-19 deaths were prevalent, the total U.S. mortality A/E ratio ranged between 119% and 121%, with about 84% of the excess deaths identified as due to COVID-19. Considering the full year of 2020, the A/E ranged between 114% and 116%.

Deaths for people under age 15 were lower than expected, but all older ages showed excess mortality. The following table considers the A/E ratios for the period after the emergence of COVID-19 and uses a fiveyear trend on death rates by ages and sex to set the expected deaths.

Author(s): Rick Leavitt, ASA, MAAA

Publication Date: February 2021

Publication Site: Society of Actuaries

U.S. Death Counts Have Climbed for All Adult Age Groups: Actuary

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/02/25/u-s-death-counts-have-climbed-for-all-adult-age-groups-actuary/

Excerpt:

The actual number of deaths for people of all ages has been 18.4% higher than the expected number.

For women, the worst actual-to-expected death ratio is for the 35-44 age group.

For men, the highest percentage of excess deaths was was for the 35-54 age group.

Author(s): Allison Bell

Publication Date: 25 February 2021

Publication Site: Think Advisor

Diverse Population Uses Nursing Homes Less

Mary Pat Campbell
Diverse Population Uses Nursing Homes Less

Excerpt:

Eight states have seen the biggest drops in nursing home use: Florida, Georgia, Louisiana, New Jersey, New Mexico, North Carolina, South Carolina, and Tennessee. Many of these states have experienced fast growth in their minority populations or have more generous state allocations of Medicaid funds for long-term care services delivered in the home.

Growing diversity is actually the second-biggest reason for lower nursing home residence, accounting for one-fifth of the decline, according to the study, which was funded by the U.S. Social Security Administration and is based on U.S. Census data.

Publication Date: 25 February 2021

Publication Site: Squared Away Blog

Murphy’s full pension payment revives debate over New Jersey overhaul

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202102241328SM______BNDBUYER_00000177-cf67-de3f-a9f7-ffef66580001_110.1

Excerpt:

Gov. Phil Murphy?s call for New Jersey to make its first full pension contribution in 25 years is generating questions about retirement-system overhaul in one of the nation’s lowest-rated states, and how might the capital markets respond.

Murphy on Tuesday revealed the proposal to pay toward pensions roughly $6.4 billion, or about 14% of his $44.8 billion fiscal 2022 budget proposal to lawmakers. Overall spending would rise 10%. Democrat Murphy’s election-year budget would increase aid to schools and provide income-tax rebates to low- and middle-income families.

Making the full actuarially required contribution will need an additional $1.6 billion expense, according to Murphy. New Jersey was initially scheduled to earmark 90% of its full contribution this year under a ramp-up plan.

Author(s): Paul Burton

Publication Date: 24 February 2021

Publication Site: Fidelity Fixed Income

Municipal bond yields rise, swept up in Treasuries surge

Mary Pat Campbell

Link: https://www.reuters.com/article/usa-municipals-treasuries/muni-bond-yields-rise-swept-up-in-treasuries-surge-idUSL1N2KV2H1

Excerpt:

Earlier this year, the $3.9 trillion market where states, cities, schools and other issuers sell debt had been resisting a steep sell off in Treasuries that lifted yields, putting the historically close correlation between the two markets out of whack.

Now, munis are catching up, with the 10-year yield on Municipal Market Data’s (MMD) benchmark triple-A scale, which started 2021 at 0.720%, climbing 45 basis points since Feb. 12. It closed up 5 basis points at 1.14% on Thursday.

The iShares National Municipal Bond exchange-traded fund (ETF) fell on Thursday to its lowest level since November at 115.14. The largest muni ETF, which reached an 11-month high of 117.95 on Feb. 11, was last down 0.43% at 115.30.

Author(s): Karen Pierog

Publication Date: 25 February 2021

Publication Site: Reuters

How Drawing Makes Us Better at Data Visualization

Mary Pat Campbell

Graphic:

Excerpt:

Once I’ve selected lots of individual graphs to use, I often need to arrange them together on a page or screen.

For example, if I’m designing an infographic, the one-page summary might involve three, four, or five individual graphs.

Or, if I’m designing a dashboard, the screen might involve three, four, or five individual graphs.

I need to decide which graph should be displayed first, second, or third. Is there a natural sequence?

I also need to decide which graphs “go together.” Is there a natural grouping? A categorization? Similar graphs should be next to each other on the infographic or dashboard.

I use a pen and paper to sketch what that page could look like.

Author(s): Ann K. Emery

Publication Date: 23 February 2021

Publication Site: Depict Data Studio

How Spending Changed for Different Income Groups

Mary Pat Campbell

Link: https://flowingdata.com/2021/02/24/how-spending-changed-for-different-income-groups/

Graphic:

Excerpt:

The categories are roughly ordered from increased spending to decreased spending. So you see by how much the cost of housing and healthcare has gone up over a couple of decades, especially for the lower income groups.

For the lowest income quintile, housing and healthcare make up more than half of spending on average.

In contrast, the higher income groups are spending more in retirement savings, education, and entertainment, and their cost of housing changed little.

Author(s): Nathan Yau

Publication Date: 24 February 2021

Publication Site: Flowing Data

The Never-Ending Economic Tragedy of Argentina

Mary Pat Campbell
The Never-Ending Economic Tragedy of Argentina

Graphic:

Excerpt:

I’m tempted to say the big takeaway from today’s column is that wealth taxes are a bad idea.

That’s true, of course, but the bigger lesson we should absorb is that a rich nation can become a poor nation.

Simply stated, if a government imposes enough bad policies – as has been the case in Argentina – then it’s just a matter of time before it declines relative to nations with sensible policies.

Author(s): Dan Mitchell

Publication Date: 10 July 2020

Publication Site: International Liberty

Puerto Rico governor rejects key deal with creditors to reduce debt due to pension cuts

Mary Pat Campbell

Link: https://www.nbcnews.com/news/latino/puerto-rico-governor-rejects-key-deal-creditors-reduce-debt-due-n1258610

Excerpt:

The impasse between the governor and a board that oversees Puerto Rico’s finances threatens to throw into limbo attempts to end a bankruptcy-like process for a government that six years ago declared unpayable its more than $70 billion public debt load.

The deal was reached with creditors who hold general obligation bonds and Public Building Authority bonds sold by Puerto Rico’s government and would resolve $35 billion worth of debt and non-debt claims, according to the board. It also would reduce debt held by those creditors from $18.8 billion to $7.4 billion, a 61 percent reduction, and would provide them with $7.4 billion in bonds and $7 billion in cash, among other things.

The board said the deal would free up more than $300 million a year for government services, and that instead of 30 cents for every dollar in taxes and fees that Puerto Rico’s government collects going to creditors, it would be less than 8 cents.

Author(s): Associated Press

Publication Date: 23 February 2021

Publication Site: NBC News

Jason Riley: Thomas Sowell’s Unique Insights on Race, Economics, and Politics

Mary Pat Campbell
Jason Riley: Thomas Sowell’s Unique Insights on Race, Economics, and Politics

Excerpt:

Thomas Sowell is one of the most influential economists, syndicated columnists, and social critics of the past half-century, having authored provocative, best-selling books on everything from race relations to childhood development to, most recently, Charter Schools and Their Enemies. His masterworks include Knowledge and Decisions, which uses Friedrich Hayek’s insights about distributed information to explain both how markets work and why intellectuals disdain markets; A Conflict of Visions, which explores the ideological origins of political struggles; and Basic Economics, a best-selling primer now in its fifth edition.

Sowell’s inspiring life—he was born black and poor in North Carolina in 1930 and received his Ph.D. from the University of Chicago at the age of 38—and expansive work are now the subjects of a new documentary, Common Sense in a Senseless World (watch here) and a forthcoming biography titled Maverick.

Author(s): NICK GILLESPIE

Publication Date: 24 February 2021

Publication Site: Reason

Does Every State Really Need a Big Biden Bailout?

Mary Pat Campbell

Link: https://www.governing.com/finance/Does-Every-State-Really-Need-a-Big-Biden-Bailout.html

Excerpt:

Then there are states like Hawaii, where cratering tourism has left the state in a $1.8 billion budget hole, with tax revenues not expected to recover until 2024. Florida and Nevada are also missing their frequent flyers after tax receipts plummeted by 7.9 percent and 13 percent, respectively. States dependent on taxing energy and mining, such as Alaska, North Dakota, Texas and West Virginia, have seen their own devastating budget hits. And sales-tax-dependent states like New York wound up in worse shape than those reliant on less volatile revenue streams like Vermont, where 32 percent of revenues come from property taxes. In all, 26 states saw their tax revenues decline in the first 10 months of 2020.

But every state’s been a winner this past year with the federal government, whose aid to states and localities rose an astonishing 42 percent. What might have been a $331 billion budget shortfall due to COVID-19 instead came to a $165.5 billion dip, according to Moody’s, and that’s before counting $79 billion in state rainy day funds. Federal aid also propped up businesses and households, which led to economic activity and hiring that boosted state and local tax revenues, while also hiking taxable unemployment benefits. Having the Federal Reserve goose the stock and housing markets with super-low interest rates didn’t hurt either.

Author(s): MICHAEL HENDRIX, MANHATTAN INSTITUTE

Publication Date: 24 February 2021

Publication Site: Governing