Economy

Roth and Traditional IRA.

|

Roth IRAs versus Traditional IRAs and Living in New York 🗽

When I first started saving for retirement, outside of my state pension about ten years ago, I opened a Roth IRA and started to maximize it. I was fairly young, and my income was lower as I was not as far along on my career path. When you are younger, and you have 30 plus years for your investments to grow, it seemed like an appropriate way to save. The idear is pay payroll taxes now, pay zero state or federal taxes when you withdraw upon retirement with the Roth.

In most recent years my mind has changed, more into the camp of the traditional IRA. For one, I found myself taking an extended leave from state service, and with so went the more lucrative retirement program and deferred compensation, which you can’t contribute to as a non-state worker. With the state, I did the traditional IRA option with deferred comp and continued to maximize my Roth IRA on the side. My other employer offers a 401K, which I’ve been maximizing, but it’s maximum contribution rate is smaller then the state’s deferred comp plan, so to avoid my taxes going up significantly, I switched over to a traditional IRA option. I already get hit every year from investment income, even if it’s reinvested. Traditional IRAs, let you deduct all contributions immediately, lowering your taxable income but you have to pay taxes when you take money out as you retire.

Part of what made me change my mind from the Roth to the Traditional was I don’t plan to live in New York the whole rest of my life. While New York allows a decent standard deduction on something like $17k when you take retirement income, many other states don’t tax retirement income at all. It’s hard to know how much money I’ll need in retirement at my off-grid property, but even in low property-tax states, there are always expenses for a hobby farm — be it equipment, fuel, vehicles, livestock, feed, minerals, and groceries. Stuff gets used up, has to be replaced. Stuff you spend money on becomes poop, scrap metal or fire in the burn barrel. Tractors and implements are mad expensive. That’s life. But saving on taxes today, means I can invest more today, plus I am spending less money to subsidize the wasteful and abusive New York State government.

NPR

|

Falling Revenue From COVID-19 Has Put State Budgets In Peril : NPR

The COVID-19 pandemic could swipe roughly $200 billion from state coffers by June of next year, according to an analysis by the Urban Institute's State and Local Finance Initiative.

Record-high unemployment has wreaked havoc on personal income taxes and sales taxes, two of the biggest sources of revenue for states. Hawaii's and Nevada's tourism industries have crashed, and states like Alaska, Oklahoma and Wyoming have been hit by the collapse of oil markets. From March through May of this year, 34 states experienced at least a 20% drop in revenue compared with the same period last year, according to data provided to NPR by the State and Local Finance Initiative.

U.S. economy shrank at record-breaking 33% last quarter, as 1.4M sought unemployment aid last week / Boing Boing

|

U.S. economy shrank at record-breaking 33% last quarter, as 1.4M sought unemployment aid last week / Boing Boing

The government said Thursday the U.S. economy shrank at a shocking 33% annual rate in the April-June quarter. This is by far America's worst quarterly plunge ever, caused by the government's reckless response to the viral outbreak, which threw tens of millions out of work and sent unemployment surging to 14.7%.

Coronavirus Live Updates : NPR

|

Wall Street Is Raking In Profits In The Stock Market, Even In A Recession : Coronavirus Live Updates : NPR

Goldman's profit surge underscores a central fact about the bifurcated U.S. economy right now: While much of the economy faces an uncertain future, Wall Street is enjoying a historic revival, as the Federal Reserve and other central banks flooded the global economy with money.

"The Fed has been able to engineer a huge bounce back in the markets by injecting trillions of dollars, benefiting investment banks primarily," Octavio Marenzi, CEO of capital markets consultancy Opimas, told CNBC.

Yeah, this is what happens when you print a lot of money to force interest rates below a quarter percent to make it cheap to borrow, that is for those who have a need to borrow and can get approved for credit. 

Empire State Manufacturing Survey (overview) – FEDERAL RESERVE BANK of NEW YORK

|

Empire State Manufacturing Survey (overview) – FEDERAL RESERVE BANK of NEW YORK

Business activity steadied in New York State, according to firms responding to the June 2020 Empire State Manufacturing Survey. After breaching record lows in April and May, the headline general business conditions index climbed forty-eight points to -0.2. New orders were unchanged from last month and shipments inched higher. Delivery times and inventories were little changed. Employment levels edged slightly lower and the average workweek continued to decline. Input price increases picked up, and selling prices stabilized. Firms were notably more optimistic that conditions would be better in six months, with the index for future business conditions rising to its highest level in more than a decade.

High Unemployment Could Be Sustained Problem

|

High Unemployment Could Be Sustained Problem

New York is facing historic unemployment due to the pandemic and is something that could shape up to be a long-term problem.

"I don't think anybody is seriously looking at a v-shaped recovery where everything by the end of this year is back to normal," said EJ McMahon, the president of the Empire Center. "I think it's going to be quite a while."

New York's unemployment rate in May stood at 14.5 percent, down from 15 percent in April. But the pace of returning jobs as businesses reopen indicate a return of low unemployment is unlikely -- and the high jobless rate could last into 2021.

"If you look at the payroll numbers in terms of job counts at the current rate of recovery from the April low, we won't have the same number of actual payroll jobs for a year and a half," McMahon said.

Most regions of upstate New York are now in phase four of the reopening, with western New York entering that stage on Tuesday. But gyms, malls and move theaters remain closed for now. Governor Andrew Cuomo says a fast re-opening could be harmful both to public health and the economy.