All about risk
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Watch a recording of Truth in Accounting’s virtual event with special guest Steve Malanga, senior editor at City Journal. In this episode, we discussed the financial troubles of America’s largest cities and the effects of Biden’s infrastructure plan.
Author(s): Bill Bergman, Sheila Weinberg, Steve Malanga
Publication Date: 14 May 2021
Publication Site: Truth in Accounting at YouTube
Link: https://news.gallup.com/poll/350048/retirees-experience-differs-nonretirees-outlook.aspx
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The differences in reliance on income sources between those who are already retired and those who are not yet retired are likely attributable, at least in part, to apprehension about the Social Security system, as well as the rise of 401(k)s accompanied by a decline in work-sponsored pension plans.
57% of retired U.S. adults say they rely on Social Security as a major income source, and 38% of nonretirees expect it to be a major source for them.
Likewise, 36% of retirees and 19% of nonretirees say a work-sponsored pension plan is or will be a major income source.
Nonretirees are most likely to say a 401(k) or other retirement savings account will fund their retirement (49%). Meanwhile, 35% of retirees mention 401(k)s as a major funding source of their retirement.
Author(s): Megan Brenan
Publication Date: 18 May 2021
Publication Site: Gallup
Link: https://www.fool.com/retirement/2021/05/18/the-best-reason-to-take-social-security-long-befor/
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Delaying Social Security may mean scoring a higher monthly benefit — but it doesn’t necessarily mean snagging a higher lifetime benefit. In fact, if you pass away at a somewhat young age, you’ll actually lose out on lifetime income by delaying your filing until 70.
Let’s imagine you’re entitled to a monthly benefit of $1,500 at an FRA of 67. If you were to claim that benefit at age 62, it would shrink to $1,050, whereas delaying it until 70 would let it grow to $1,860.
But if you were to pass away at the age of 78, which is considered relatively young given today’s life expectancies, here’s what you’d be looking at in terms of lifetime income:
Filing at 62 would leave you with $201,600
Filing at 67 would leave you with $198,000
Filing at 70 would leave you with $178,560
Author(s): Maurie Backman (TMFBookNerd)
Publication Date: 18 May 2021
Publication Site: Motley Fool
Link: https://news.yahoo.com/treasury-lifeline-won-t-bail-190632365.html
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(Bloomberg) — The U.S. Treasury Department is sending a message to states and cities that the billions in aid from the American Rescue Plan should provide relief to residents, not their governments’ debt burdens.
The department on Monday released guidance on how state and local governments can use $350 billion in funding from President Joe Biden’s $1.9 trillion rescue package. The funds are intended to help states and local governments make up for lost revenue, curb the pandemic, bolster economic recoveries, and support industries hit by Covid-19 restrictions. In a surprise to some, these funds can’t be used for debt payments, a potential complication for fiscally stressed governments that had already etched out plans to pay off loans.
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Illinois Governor J.B. Pritzker had suggested using some of the state’s $8.1 billion in aid to repay the outstanding $3.2 billion in debt from the Federal Reserve’s emergency lending facility and to reduce unpaid bills. Illinois was the only state to borrow from the Fed last year, tapping it twice. On Tuesday, Jordan Abudayyeh, a Pritzker spokesperson, said the administration is “seeking clarification” from the Treasury on whether Illinois can use the aid to pay back the loan from the Fed.
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The rule could also affect New Jersey, which sold nearly $3.7 billion of bonds last year to cover its shortfall during the pandemic. Assembly Republican Leader Jon Bramnick, a Republican, in April had called for Governor Phil Murphy, a Democrat, to use some of the federal aid to pay down the state’s debt.
Author(s): Shruti Date Singh, Amanda Albright
Publication Date: 11 May 2021
Publication Site: Yahoo Finance
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State, city and county governments this week will receive their first infusion of direct aid from $350 billion in emergency funds approved in the American Rescue Plan, two months after President Joe Biden signed the COVID-19 relief package into law.
The Biden administration launched an online portal Monday that will allow local and state governments to access their share of funds from the Treasury Department. The amount allocated for each state and municipality was determined by unemployment data.
Most will receive money in two tranches – one this year, the second in 12 months – but states that have seen their unemployment rates increase by 2% or more since February will receive funds in a single payment. Payments will begin within days. Money must be spent by the end of 2024.
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The Treasury Department also provided long-awaited guidelines on how funds can be used. State governments and territories are prohibited from using funds to offset tax cuts that were enacted after March 3, limitations that have already prompted the Republican attorney general from Ohio to sue the Biden administration. In addition, recipients cannot use funds to make a deposit to a pension fund or pad reserves.
Author(s): Joey Garrison
Publication Date: 10 May 2021
Publication Site: USA Today
Link: https://taibbi.substack.com/p/con-of-the-week-greensill-capital
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In finance there regularly appears a character who stands on a soapbox and claims to have re-discovered the natural laws of the universe. Go ahead, jump: with 10 shares of Invest-O, you won’t come down! Alan Greenspan’s declaration in the middle of the first tech bubble that we might be in the middle of a “once-or twice-in-a-century phenomenon that will carry productivity trends to a new higher track” helped birth the “new paradigm” theory, which denounced caution before investing in companies without revenues or plans as anachronistic timidity.
Greensill prophesied a revolution in his erstwhile dull trade. He hammered the theme that “AI” and “Big Data” were bringing about a “tectonic shift,” described by one writer as “the biggest revolution in history.”
Author(s): Matt Taibbi
Publication Date: 19 May 2021
Publication Site: TK News
Link: https://taibbi.substack.com/p/tk-newsletter-introducing-racket
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In 2007, before the crash, Goldman, Sachs CEO Lloyd Blankfein even inadvertently paid tribute to one of the most ancient scams — the pig in the poke — when he ordered subordinates to start selling off the mortgage-backed “cats and dogs” on his company’s books. This detail, which came out in a Senate investigation of Goldman’s “Big Short,” let the “cat out of the bag” about the real value of mortgage-backed securities.
In 2021, we’re seeing a surge in con-like corruption cases once again, many involving old-school ripoffs. An economy puffed up by the steroid enhancement of Fed support has led to a great flowering of such creative grifts. Some are not terribly accessible to non-financial audiences at first glance, so to make it a bit easier to keep track of new cases coming in, I’m creating a new feature, “Racket of the Week.”
We had a cartoonist draw up icons for a key system, which will help explain how and if the story covered contains elements of common street rackets.
Author(s): Matt Taibbi
Publication Date: 7 May 2021
Publication Site: TK News
Link: https://marypatcampbell.substack.com/p/mortality-nuggets-global-excess-deaths
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In particular, it is pretty clear to me that specifically in the U.S., the non-COVID excess mortality has been very high. I do not think that’s under-counted COVID deaths. I think it’s due to other causes. We’ve already seen that car accident deaths were up, even though total miles driven was down by a lot.
So yay for their statistics in grabbing the excess deaths, but boo for assuming all those excess deaths were COVID.
Now, results of COVID and COVID policies, sure, I’d go with that. But do you want to start digging into the stats of suicides, drug overdoses, “accidental” deaths, and more? How about deaths of neglect? I bet that is involved in a bunch of non-COVID elderly deaths.
Author(s): Mary Pat Campbell
Publication Date: 18 May 2021
Publication Site: STUMP at substack
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The first metric is net amortization, which measures whether total contributions to a public retirement system are sufficient to reduce unfunded liabilities if all actuarial assumptions—primarily investment expectations— are met for that year. Plans with positive net amortization are expected to retire pension debt over time and therefore improve their funded status.
Pew reviewed the three-year average for net amortization. This figure provides a more complete picture of contribution adequacy given the impact of volatile investment performance and demographic experience on plan assets. In total, the 33 cities in Pew’s analysis achieved positive amortization (104% of the benchmark) from 2015 to 2017. However, individually, more than half of the cities had negative amortization. Notably, Chicago and Dallas contributed less than 50% of the benchmark. In contrast, New Orleans contributed 174%, or $132 million, which was well over the city’s benchmark over the time period. For cities that are poorly funded, net amortization can indicate that they are on a path toward sustainably funding their pension plans. For example, New Orleans and Philadelphia have both increased their contributions significantly in recent years to achieve positive net amortization and decrease unfunded liabilities. On the other hand, better funded cities that fell short of the benchmark may face growing pension debt absent a policy change or adjustment.
Author(s): David Draine
Publication Date: 18 May 2021
Publication Site: Pew Charitable Trusts
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The average pension is processed in two to three months.
So why wasn’t Karen getting her checks?
The government agency that processes pensions for federal workers, the Office of Personnel Management, tells 7-Investigates it has a backlog of more than 25,000 and that “the COVID-19 pandemic has disrupted normal operations.”
An agency spokesperson says that’s because the work is “paper-based,” and need to be shared with different agencies.
Anna-Marie Tabor, director of the Pension Action Center at UMass Boston, says that’s surprising to hear.
“It’s a big problem especially during the pandemic when people can’t just go into the office and pull out a box of documents. These records really should be converted to electronic documents so that they can be accessed in 2021, especially in case of a pandemic,” says Tabor.
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Publication Date: 18 May 2021
Publication Site: 7 News Boston
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Between roughly 1997 and 2009, legislators decided to pay less of the employer contribution amount than statisticians deemed necessary. In kitchen table terms, those legislators chose not to pay their bills.
Now that creditors are demanding those bills be paid, critics are claiming the payouts are undeserved, and too generous.
It’s really a shame so many seem to feel it’s OK to not pay bills from the past because the interest is too high. I bet few business owners would accept nonpayment because customers chose to not pay when billed and now claim payments are too high.
Author(s): Thomas Schreiber
Publication Date: 18 May 2021
Publication Site: The Morning Call
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Former President Trump has been receiving a presidential pension since he left office in January, Business Insider reported Tuesday
A spokesperson for the General Services Administration confirmed to Insider that Trump has been paid $65,000 in presidential pension payments through May 14.
Former presidents are entitled to receive pensions after their terms under the Former Presidents Act, which Congress passed in 1958 largely in response to former President Truman’s financial troubles after leaving office in 1953.
Author(s): OLAFIMIHAN OSHIN
Publication Date: 18 May 2021
Publication Site: The Hill