text: NSX owners all have one thing in common: they're either closet or outright elitists. That's why the fastest way to get NSX groupies in an uproar is to tell them the holy C30A or C32B engine that resides inside the NSX is nothing more than an overgrown version of the B-Series found in a lowly Integra or Civic. They'll conveniently ignore the fact that single-cam versions of the C-Series engine all ended up in Acura Legend Sedans. But NSX elitists will have none of this and will forum-jump you with the help of thousands of their elitist friends until you are posted into submission. Once you get over the usual NSX owner's mentality, tuning the C-Series engine revolves around much of the same concepts and technologies as tuning a B-Series engine, it's just a lot more expensive. This boils down to four basic categories in the order of how much power you'll make and how far you want to go into debt: NA bolt ons, bolt-on supercharging, all-motor power and displacement, and turbos on rebuilt bottom ends. Only two of these solutions will not blow up the very expensive NSX transmission in the long run. Guess which one we went with. The Fujitsubo Ti exhaust weighs in at only 19.8 lbs for such a large muffler. Using such a larger muffler helps keep this NSX very discrete in sound as we putt around, but it still sounds beautiful when fully opened up. Upstream we also replaced the two heavy stock catalytic converters with lightweight, high-flow Random Technology units that further reduce weight as well as increase exhaust flow since the A/F ratio has now leaned out with just the cats. The Fujitsubo Ti exhaust weighs in at only 19.8 lbs for such a large muffler. Using such a Even though we're perusing a pretty mundane power solution using mostly bolt-on parts, it doesn't mean it's all yawns. In fact, being smart about the type of bolt-ons and how they're used to get a slight winning edge is exactly what spec racers spend a great deal of time on. Being realistic with what you want to achieve also helps. Like most Honda engines, the C30A was designed to be a high-rpm and high-horsepower engine most at home on the track. Unfortunately, 90 percent of NSXs will never see the track or be driven with the talent that it was intended for. So instead of tuning our car for big top-end power numbers that we will never see on the street, we're going to fatten up the torque available at lower rpm and maybe see some mild horsepower gains past 6000 rpm, where VTEC kicks in. Remember, the goal of tuning a car is to make it faster, and not necessarily more powerful. On the intake side, we started with a simple K&N Engineering 57 Series Fuel Injection Performance Kit (FIPK). The kit is designed to eliminate the stock airbox and panel filter assembly and replace it with an open element air filter to diminish high-rpm flow restrictions that come from the airbox. It's basically a large cone filter fitted onto a venturi-shaped adaptor that hose-clamps onto your stock intake tubing. It might seem like a very simple solution, but according to K&N, it's proven to make power. We made our own little improvements by welding the intake kit onto a section of 3-inch mandrel-bent aluminum tubing, which replaces the stock baffled intake flex tube. The idea here is to eliminate the corrugated baffles or sudden changes in pipe diameter that can cause turbulence inside the tubing, which restricts flow. To ensure that the intake gets fresh cold air from outside of the engine bay, we left the stock intake air plumbing and lower intake box in place. Since our NSX already came with a DC Sports header installed, much of the power gains were already made. As was, the car made 249 whp on the dyno, and because one of the simplest power gains is through a tubular header, we didn't expect to see huge subsequent gains. Instead, we'd try to gain speed through lighter parts. 1 | 2 | 3 | » | View Full Article By Jay Chen Enjoyed this Post? Subscribe to our RSS Feed, or use your favorite social media to recommend us to friends and colleagues!


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One of my favorite episodes. But then, I think anything with Leela is one of my favorite episodes.
You know, if he was ginger he'd look a hell of alot like my dad.
This particular ep actually freaked me the fuck out when I saw it as a kid. Yes, it's true - you can be scared by Doctor...
4th needs more love.

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The face of education has changed drastically over the years. A few years back students were dependant on books and what their teachers taught them. This brought with it a series of problems
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Is the Roth right for you?
Published on - June 12th, 2013 (by Robert Brokamp)
This is a post from staff writer Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the adviser for The Motley Fool's Rule Your Retirement service.
This year, it happened — something many have been predicting for years: Taxes went up. And most likely, the hikes will just keep coming. There's no other way to pay off the country's debt and fund the ballooning entitlements due the baby boomers as they retire. The increases may not affect everyone, and those who earn more will pay more, but someone's gotta pay.
One way to hedge against higher tax rates is to contribute to a Roth retirement account. Your contributions aren't tax-deductible, but the withdrawals are tax-free once you turn 59 ½ and you've had a Roth account for at least five years. Who wouldn't want tax-free money if tax rates are just going higher?
Well, as attractive as the Roth can be, it's not always the best choice for everyone. You see, a contribution to a Roth means you are forgoing a contribution to a traditional retirement account, which might give you a tax-deduction today in exchange for paying taxes in retirement. So the choice is: Should you pay taxes today or in retirement?
Here's the rule of thumb: If you're in a higher tax bracket today than you will be in retirement, stick with the traditional account. However, if you expect to be paying a higher tax rate in your golden years, go with the Roth. The same math applies when considering a "conversion," which is turning a traditional account into a Roth. The amount in the traditional IRA that comes from deductible contributions or investment growth is taxed as ordinary income in the year of the conversion, but then it grows tax-free.
That's all handy-dandy, but there's one problem: While it's a safe bet taxes will go up, it's difficult to predict what that will mean for any given individual. Still, here are some considerations:
- For many reasons, such as a drop in income, most people pay fewer taxes in retirement than they did while they were working. Plus, it's likely that senior citizens, as a group, will bear the smallest brunt of future tax hikes.
- Make sure to factor in the difference in tax rates between the state where you currently live and the state to which you'll retire, if you plan to move.
- A traditional vs. Roth calculation assumes that any tax savings from contributing to the traditional account is invested and saved for retirement. If you'll instead spend those tax savings, then the Roth looks much more attractive.
As an example, consider the situation of a Motley Fool reader, who posted his Roth conundrum on one of our discussion boards. He's in the 33 percent federal tax bracket, and pays a 9 percent state income tax to boot. It's possible he'll move to Texas after he retires, which is among the seven states that don't have an income tax. (The others include Florida and Nevada, also popular retirement destinations.) So if he were to contribute $10,000 to a Roth rather than a traditional account, he'd be giving up on a $4,200 tax deduction, factoring in both federal and state taxes. He's better off sticking with the traditional account, especially factoring in the possible move to Texas.
Sneaking in through the backdoor
The fellow can contribute to a Roth 401(k) because his employer offers the option. Otherwise, he'd be out of luck since his income makes him ineligible for a Roth IRA. Once you earn a modified adjusted gross income (AGI) of $112,000 if you're single or $178,000 if you're married, your ability to contribute gradually phases out.
However, all is not lost for those who don't have a Roth account at work, are ineligible for a Roth IRA, or have already maxed out their 401(k)s. It gets complicated, so stick with us.
First off, not all contributions to a traditional IRA are deductible. If you have a plan at work and are single with an AGI of $59,000 or are married and have an AGI of $95,000, your ability to deduct the contributions gets phased out. If you're above those income limits, you can make a nondeductible contribution to a traditional IRA. As the name implies, you can't deduct the contribution, but the investments still grow tax-deferred.
Now, here's where the Roth comes in. If you don't have any pretax money in traditional IRAs, including SEPs, SIMPLEs, and rollovers from prior employers' plans, you can immediately convert that traditional IRA to Roth. (And by "you," we mean that you can ignore what your spouse has.) Here's the real bonus: Because you couldn't deduct the contribution and because the account didn't have an opportunity to grow, you won't owe any taxes on the conversion. This little trick has become known as the "backdoor Roth."
It gets complicated if you have pretax money in a traditional IRA, since the amount is prorated across all the accounts for tax purposes. For example, if you have $50,000 in pretax IRAs, and then you make a nondeductible contribution of $5,000 to a traditional IRA and immediately convert that account to a Roth, only 10 percent ($50,000 divided by $5,000) will be tax-free. However, there's one possible way around this. You can transfer those pretax assets to your existing 401(k), if your employer allows it. The downside: 401(k)s have limited and often pricier investments, and most don't allow individual stocks and bonds.
Finally, based solely on the math, younger people in the 15 percent or lower tax bracket who expect to build up a large portfolio over their careers should choose the Roth.
Other benefits of the Roth
That's the math. But there are other perks to the Roth that might tip the scales in its favor if the math is fuzzy.
- Contributions to a Roth IRA – not earnings – can be withdrawn tax- and penalty-free before age 59 1/2. This has its downsides, since it makes it more tempting to spend money that should be left for retirement. But there are some proponents of using the Roth IRA as a college savings account, and even an emergency fund.
- Unlike the traditional IRA and 401(k), the Roth IRA does not have required minimum distributions (RMDs) at age 70 ½. The Roth 401(k) does, but you can transfer the money to a Roth IRA after you retire to get around RMDs.
- Anyone who inherits a traditional IRA will have to pay ordinary income taxes on the distributions. However, the Roth account will still maintain its tax-free status. And nothing says "I love you" like giving someone tax-free retirement savings. (However, all retirement accounts are included in the calculation of whether estate taxes are due.)
The bottom line
We know the direction of tax rates (i.e., up), but we don't know the magnitude and the targets. They're decided by Congress, and who knows what those folks will do? Of course, they didn't put themselves in office, which means the decision ultimately lies with the voters — and they can be even crazier. Some people argue that we can't even assume that distributions from a Roth will remain tax-free. But just as diversification is important in your portfolio, tax diversification can also make sense. For many retiree wannabes, one way to hedge against future significant tax increases is to have at least some assets in a Roth account.
This article is about Investing, Retirement
I never really figured out which I should have put my money in so I actually decided to just max out my 401k and Roth. It made it easier plus since I live in Florida now and have no idea where we will be i didn't want to guess wrong. Sure we have plans to stay in FL now but that could all change later down the road. A little diversification goes a long way.
Would love some help figuring out my situation. I am under 30 years old. I will make an even $120k in income this year.
I am currently on pace to contribute the max to my traditional 401K. If I do so, it seems that my MAGI has been reduced to $102.5k and I believe I should have no issues contributing the max to my roth IRA.
Is this accurate, or am I foolishly misunderstanding my tax situation?
The mistake most people make when doing this analysis is comparing their current tax bracket to their expected tax bracket in retirement. The real comparison is your current tax bracket to your effective tax rate in retirement.
What I mean is that if you contribute to a traditional account today, your tax savings are determined by your current tax bracket. So if you're in the 25% tax bracket, you will save 25% of your contribution from taxes (assuming you aren't right on the line between brackets). But when you withdraw the money in retirement, it's not all taxed at a single rate. Some may not be taxed at all (because of deductions and exemptions), and some will be taxed at lower rates (e.g. 10% and 15%). So even if you're still in the 25% tax bracket, the total tax rate on your withdrawal will be less than 25%, meaning you came out ahead. It's actually very possible to be in a higher tax bracket later and still come out ahead with a traditional account as opposed to a Roth because of this effect.
This is assuming that you actually contribute more to the traditional account today because of the current tax savings. The presence of pensions and/or social security benefits will also complicate things, but the point remains. If you simply compare your current and future tax brackets, the Roth looks more attractive than it actually is. It's still a great retirement vehicle but it may not be the optimal decision for you, even if tax rates rise.
Actually, that's not quite right either. If your marginal tax rate in retirement turns out to be higher than your marginal tax rate today, then you would have been better off if you'd put some portion (not necessarily all) of your retirement savings in a Roth account rather than a traditional one.
Ideally, what you should be aiming for is this: Have just enough money in a traditional account so that when you're retired, you can take advantage of all available deductions, exemptions, and tax brackets less than what you're currently paying now; any retirement savings in excess of that amount should go in a Roth account. (I'm ignoring the issue of Social Security benefits being taxable when your income is over a certain amount, because that makes things truly ridiculously complicated.)
Now, to get that exactly right, you'd need to be psychic: You'd need to be able to predict future tax rates AND future investment returns. But the easy take-home message is that if your income tax liability today is more than $0, it's almost certainly a good idea to be putting some money in a traditional account. Even if "tax rates go up."
"if your income tax liability today is more than $0, it's almost certainly a good idea to be putting some money in a traditional account. "
Its certainly a good idea for your money manager, whether its good idea for you is a different story.
One of the problems is that the limits on retirement savings are the same for a Roth and a traditional IRA. If your tax bracket is 25% both now and in retirement, saving the maximum in both will result in 25% less money for you to spend in retirement. You can, as the article above points out, put the money you save from taxes into taxable savings. But most people don't do that.
Most people are going to have more opportunities during their working lives to build traditional tax-deferred retirement savings than tax free Roth type savings. In general, its best to take the opportunities you have to build your tax free accounts.
That's a good point Johanna about getting it technically optimal. Honestly, the reason I choose to mostly ignore that point is because, like you say, to get it right you have to be psychic. I think the biggest thing that people miss is the marginal vs. effective comparison, which is somewhat easier to compare.
In response to both Johanna and Ross, I agree that diversification is important. Ross, you can say that most people won't invest the tax savings from going the traditional route, but that doesn't mean it shouldn't be brought up as an option when trying to determine the best approach for you. To just dismiss it as an option is just giving in to doing worse than what's possible.
Also, contributing to a traditional gives you more options because you can always decide to convert later. Once you've contributed to a Roth, you've paid the taxes and that's it. No flexibility down the road (beyond the next year).
I have a Roth IRA and contribute to it, so I'm not anti-Roth. But I do think the benefits of a Roth are often overblown and that the comparison that's often used is wrong and misleading.
Whether you come out ahead investing your tax savings depends on your other investment options.
If you have $6000 to save and put that $6000 in a traditional IRA and you will get the same return as paying the $1500 in taxes and placing the remaining $4500 in a Roth IRA.
But if you have $8000 to save, you invest $6000 in a Roth IRA and pay $2000 in taxes. But you can still only invest $6000 in the traditional IRA. So the $2000 remaining, your tax savings, would have to be invested in a taxable account. You will likely come up short compared to the Roth IRA depending on your investment choices and tax brackets.
The other thing to remember is that marginal tax rates on tax deferred accounts work a lot like any other income source. The more you take out, the higher the tax rate. That means the more you have saved in those accounts, the higher the tax rate you are likely to pay when you withdraw it.
To clarify the above, you only get a $6000 deduction for the traditional IRA contribution. So you will still have to pay taxes on the remaining $2000 and will have $1500 left to invest elsewhere.
Actually, even if in the situation you describe, where you max out your traditional IRA ($5500 for 2013) and invest the rest in a taxable account, that can still come out ahead of simply maxing out your Roth. There are plenty of variables, but the point remains that there are advantages to a traditional that many people skip over when extolling the virtues of a Roth.
And on your last point, if you save $2,000 in taxes by going with a traditional, you have that entire $2,000 to invest. It's not extra income, it's less taxes, which is different.
Matt -
No, you don't have $2000 to invest, you have to pay $500 in taxes on that $2000.
$8000 to spend
$2000 taxes on $8000
Invest remaining $6000 in Roth
$8000 to spend
Invest $6000 in tax deductible IRA
$500 taxes on remaining $2000 after deduction
$1500 left to invest in taxable account
On withdrawal:
Roth IRA $6000 + earnings
Traditional IRA $4500 + 75% or earnings
To get the same amount of money, The $1500 in taxable savings needs to generate net returns after taxes equivalent to the same rate as your tax deferred account. That is actually unlikely to happen. If you can do that, there is not much point in having the tax deferred account at all. Just put all the money in the taxable account.
Just seeing your response now, and it is a good point that I missed on not having the full $2000 to invest. Thanks for the clarification.
Your "on withdrawal" calculation still assumes that the traditional IRA is taxed all at the margin, which may or may not be the case. There is a more complicated analysis needed and the end result with differ for each individual's situation.
What's the max you can put in a traditional vs. Roth IRA?
I know for 401K it is $17,500 for 2013.
This kinda stuff BEGs for a table to remove the confusion!
For a 401(k), whether Roth or Traditional, the max employee contribution is $17,500. For an IRA, once again whether Roth or Traditional, the max is $5500. There are also catch-up allowances if you are over 50.
I think its sort of a fool's game to say "If you expect to be in a higher income bracket later…" – It isn't possible to know that, so you're either speculating:
1. End of the world scenario that the evil government jacks up everyone's rates (yet leaves Roths untouched)
2. You somehow double your taxable retirement income relative to your non-retirement income. I believe someone who saves like this is unlikely to inflate their lifestyle considerably upon retirement.
The middle three quintiles of income earners in America have an average income before taxes between $42,000 and $94,000. The effective income tax rate for those groups goes from 9% to 15% (inclusive of FICA taxes, which don't apply in retirement). Is this enough of a difference to even notice? Note, I picked these three groups since people in the lowest quintile may not be earning enough to save anything, and people in the highest quintile aren't going to be eligible for Roth accounts anyway.
The proper strategy, in my mind, is to:
1. IF you have a 401k with a match, make sure you get your total match. This is a part of your employment compensation
2. Put some money in Roth Accounts. Try to match your pre-tax savings or max out. This is good for tax diversification.
3. Save in taxable accounts. Capital gains rates are frequently lower than income tax rates, this allows for some early retirement flexibility with access to your savings.
In Step 3 of your suggested plan, it seems like you're comparing capital gains rates to the income tax rates you will face with a traditional 401k. This is an incorrect comparison. In a taxable account, the money going in has already been taxed, so you have to factor that in as well. And again, with a traditional account, it's the effective tax rate that matters, not the marginal rate. There are situations where a taxable account may be preferable to a traditional 401k, but you have to consider the whole picture.
My assessment wasn't really based on the best tax strategy (impossible to predict, as I originally stated) but my idea of the best investment diversification. I think the access of taxable accounts for people who save a lot of money, and perhaps won't work until 59.5, is a big draw.
I agree with your first point. The fact that its taxed initially (and perhaps, ongoing, if you receive dividends) is a consideration. I'm not sure I follow your second point, since capital gains are a way to lower your effective tax rate. The tax rate on capital gains for income in the 15% tax bracket is still 0, right?
We max out our 401ks at work. I have both a traditional 401k and a Roth 401k, I do 2/3 traditional and 1/3 Roth in my 401k up to the max ($17,500). No match. Mr. Sam has a great match, he puts everything into his traditional 401k.
We have, for the last few years maxed out our nondeductible IRAs ($5,500 this year for each of us). When it became legal for us to convert traditional to Roth we did so and then we have contributed and converted since then.
Since our IRAs are non deductible it, to me, wouldn't make any sense to keep them traditional since we are already putting in after tax dollars and we get no tax benefit now.
"You see, a contribution to a Roth means you are forgoing a contribution to a traditional retirement account…" Actually, I have both, which might be more common than you think.
Thanks for this post! I think it's quite easy to fall under the assumption that a Roth is the only way to go and it should be done blindly. Like any other investment decision there needs to be some due diligence done to make sure it fits your needs. I tend to be of the opinion that both are good to have, if you can have them, so you can benefit from any possible tax diversification.
I am so glad this article happened. I have a question that has been burning for several years, but I've never been able to find an answer.
How is the tax rate you'll pay calculated at the withdrawal of a traditional retirement account (trad IRA, 401k, etc)?
For example, if you worked as a high-power executive for many years, staying at the top rung of the tax bracket, and steadily put money into a tax-deferred account, then quit your job 2 years before retirement to work part time as a florist, putting you in the bottom rung of the tax bracket….can you seriously get away with being taxed at the florist salary for ALL of you contributions?
No, and I'm not sure why you'd think that you would.
Your tax rate in retirement is calculated the same way as your tax rate pre-retirement: based on the amount of your taxable income. Taxable income includes earned income, dividends and interest on taxable accounts, withdrawals from traditional retirement accounts, and various other income sources.
Thank you, that has cleared up it up. As much reading as I do about retirement accounts, I've never been able to comprehend the 401k. So, you don't get the taxes taken out at the withdrawal? You instead get taxed at the end of the tax year, in which you have to add what you withdrew that year from your 401k + any other income you earned?
I was under the impression that they automatically took the tax out BEFORE you get the amount you withdrew, but then how could they do that until they know what total income you've made for the year so they know what tax-rate to apply? Or is it like a salary job….do they only tax you per the amount of the withdrawal, then any other income you earn in the year is reported to the IRS later.
You don't have to answer, I'm just throwing out all of the questions out there if anyone has info. I've tried to understand the 401k, but honestly, there's SO MUCH info out there and it just seems really convoluted. As someone who takes interest in PF, I can't imagine how impossible it would be for folks who don't. I wish learning this stuff was a requirement.
Distributions from a 401k should be like any other non-wage income: no taxes are deducted, and you're responsible for paying the appropriate amount of tax. For most people, if you will owe more than $1,000 in taxes at the end of the year, you need to make estimated quarterly tax payments. To calculate this amount, you need to estimate what your income will be for the year, and pay the appropriate amount of tax. When April 15 comes along, you use the income you actually received to figure your tax, and either get a refund or owe more depending on how it compared to your estimated taxes.
Johanna and Lucas answered your main point, but I'll reaffirm the answer: the taxes you owe on distributions from a 401k are based only on the amount you withdraw, not on what your tax bracket was when you contributed money to the 401k.
Thank you everyone. That really does clear up so much for me. Wow, I really had no idea how 401k's worked. Maybe when I go back and read all those articles it will make a little more sense now.
Makes me wish I'd asked years ago. So, what I'm gathering from the responses is that it's best to have ALL of your debts, mortgages, loans, etc PAID before you retire so that you can maintain your lifestyle at a lower tax bracket. The more money you need to take out, potentially the higher the tax bracket.
I contribute to the employer match for my 401k and to my Roth–I've been slacking on the Roth, but after this article I think I'll suck it up and do the max for that as I plan on being at a higher tax bracket when I retire.
But, no matter where I get my income from in retirement (part time job, rental income, 401k), with the exception of the ROTH and social security, everything is added together and taxed per their collective total.
Yes you can That is one of the less understood aspects of extreamly early retirement. If you make good money and can pump it into a 401k you save a ton on taxes. Then if you only need a very small salary to live off of you are close to tax free on the withdraw. You can setup a SEPP plan to pull money out of a IRA/401k before you are "retirement" age and then use what you need and put the rest into a roth or even another tax defered IRA (as long as it isn't the same one you are pulling money out of). It is crazy how much of a loophole this seems to be
You can't put money into an Roth or Traditional IRA unless you (or your spouse) have earned income. So if the money from your SEPP is your only income, you aren't eligible for an IRA.
The answer is yes, sort of. He will be taxed at the marginal rate for the combined income from his florist job and whatever money he withdraws from tax deferred accounts. To maintain his previous income, he is going to end up paying some taxes at the higher rate he paid when he saved the money. But he will pay a lower rate on money he withdraws before his combined income gets to that higher marginal rate.
Looked at another way, he would end up paying a very high tax rate on that florist income. Its the nature of marginal tax rates that each additional dollar, no matter what its source, is taxed at the higher rate.
I would advocate for that cut off being slightly lower, even. You make great points here.
Both are good
IRA/401k you get the tax benefit at your marginal rate
ROTH – you get tax benefit closer to your average rate (is difficult to predict).
HSA – you get tax benefit now and later (like a supper roth).
So my approach right now based on my tax situation and prediction in retirement
1) max 401k
2) max HSA
3) max Roths
4) other taxables
This is a great overview. I've thought a lot about this topic recently and have come to the conclusion you stated near the end of your article, I'm going to do a bit of both. We don't know where taxes will be when we retire (especially being that it's 40 years away for me), so diversifying yourself is probably the best option.
Do whatever you can to contribute to a ROTH IRA. The benefits are outstanding. I recommend contributing more than you can afford to retirement, after awhile you will not feel the pinch. Start with workplace retirement account to get employer match, next contribute to a ROTH.
"There's no other way to pay off the country's debt and fund the ballooning entitlements due the baby boomers as they retire."
That cliche isn't really true if its applied to taxes paid on retirement savings. In fact, it isn't true in any sense since there is no reason to think we will need to "pay off the country's debt" in anyone's lifetime. We have, after all, been in debt almost continuously since we borrowed money to fund the revolutionary war.
Moreover, changes to income tax rates are likely to have a marginal impact on the question of whether a Roth or a Traditional IRA turn out to be a better individual choice. This is because the real increase will come from moving into (or out of) a higher marginal tax bracket. Whatever happens to tax rates, they are going to be relatively small compared to those jumps.
Its important to remember that taking money out of your traditional IRA or 401(k) whether as a required minimum distribution or because you need it to live, raises your income. If the bulk of your retirement income is coming from savings in these accounts, you are likely to be in a higher tax bracket than if you have tax free resources. Depending on your income "tax free" resources would include Social Security.
This makes savings in a Roth account a valuable tax management tool in retirement. If you are relying on savings for retirement, you can keep your tax bracket lower by using money from your Roth. You don't need to withdraw any money, at a higher tax rate, beyond the minimum distribution out of your traditional retirement accounts.
Its also important to remember that Social Security is tax free when your income is below a certain level. So taking money out of tax-deferred accounts can kick in additional taxes on Social Security income. You can use money from your Roth to keep your income below those limits.
I think the point made by Matt above is important. If you are living primarily off tax deferred savings, then a good portion of the money you withdraw will be taxed at much lower rates than your marginal tax rate. If all your retirement spending is coming out of a Roth account, your savings from having already paid taxes will be at those same low rates.
What is critical here, is not that you can predict what your tax rates will be when you retire. Its that you need to have a variety of tools to manage your taxes in retirement. Significant savings in Roth accounts are a very important tool for that purpose.
We look at it as a hedge, and are lucky to be in the situation where this year we should be maxing out our 401Ks at work and contributing the max to our Roth IRAs.
Our marginal income tax bracket is 25%, and we don't have any state income taxes (FL, yay!), and it wouldn't shock me if we move somewhere with state taxes in the next 30 years. Also, in my gut I just don't see the income brackets keeping up with inflation long term as that would be an easy way to increase tax revenue without it looking like a tax increase.
Knowing what to do with your money is important, especially when it comes to your retirement. Whether or not Roth is ideal for you depends on your financial situation, but one thing is for sure, you can no longer afford to throw all of your savings into one account or strategy. Diversity is key!
Thanks for the great advice! Its hard to know exactly what the best decision for you is at this time but, good to prepare.
Stupid question that I didn't see answered. . . If I have a Roth now, and decide down the road in a couple years that it's a bad idea, or no longer meet the income requirements, can you move that to a traditional?
Not in a couple years and there is absolutely no reason you would want to. You can change your mind for contributions for the current tax year when you file your income tax return.
If you want to make tax deferred contributions to your retirement you can open a traditional IRA in addition to your Roth.
The income limits only apply to contributions you make in years where your income exceeds the limit. It has no effect on past contributions.
Awesome! Now I just need a working crystal ball to help me figure out A) my income before I retire and B) where I'll live in retirement. Shouldn't be too hard — it's only 33 years away.
Your crystal ball probably doesn't have to be quite as clear as you think. If you're in a career with small, steady raises that may or may not keep up with inflation then you're likely better off with a traditional IRA. If you're in a job where you're likely to get a promotion and significant raise at some point (i.e. one that bumps you up into a higher tax bracket), then you're likely better off with a Roth for now, then switching to a traditional once you're in a higher tax bracket.
"There's no other way to pay off the country's debt and fund the ballooning entitlements due the baby boomers as they retire"
.. lots of people forget that the boomers funding social security for most of their lives.
That's true, though they also paid lower income taxes than would otherwise be required because of the surplus from Social Security.
Some people had lower income taxes because of the extra Social Security taxes, but probably not the same people in the same proportion to the amount they paid in extra Social Security taxes. Social Security is the classic "flat tax", at least until you get over $100,000 in wages. There are no loopholes, no credits and no deductions.
Sure, but the person I responded to was talking about the "boomers." Who paid how much varied, but there's no question that the generation as a whole paid less in income taxes because of the excess Social Security taxes they paid.
That benefit from excess social security taxes was not limited to "boomers", it applied to anyone who paid taxes including some who were receiving benefits.
Remember, the bulk of the "boomers" social security taxes went to pay benefits to the previous generation. In the same way each following generation pays the previous generation's benefits.
Is a regular Roth IRA and an employer-sponsored Roth 401(k) separate in terms of contribution limits? I want to max out my Roth IRA this year ($5,500), so if I do this, will I be able to contribute additional money to my Roth 401(k) through my employer?
Yup, they're separate. I contribute to my employer's 401k plan (just up to the matching amount, but I could do more if I wanted), and I also recently opened up a Roth IRA on my own, which I plan on maxing out ($5,500) this year.
Check out Usiere Uko's latest book, "Practical Steps to Financial Freedom and Independence: Your Road Map to Exiting the Rat Race and Living Your Dreams." It is both an inspiring and practical book that I think everyone wanting to have success with their financial future, should read.
2 years ago I started maxing out my annual 403B contributions and was able to open an IRA with 5,000$ that I immediately converted to a Roth. Does anyone know if I can continue to contribute to this account with after tax income whenever I want or once I converted do I have to leave it alone?
Depends on your income – if you are over the Roth Contribution limits, you will have to do the non-deductible IRA, then convert again.
We sort of do both. Before self-employment, I had a 401k and a Roth IRA. Now we both just have Roth IRA's and are looking into opening a SEP IRA. Our plan is to take out the max allowed for the minimum tax bracket in retirement and fill in any blanks with the Roth IRA withdrawals so we don't bump ourselves into a higher tax bracket. That works, right?
Reasons to go with Trad. IRA –
1) you are sure to get the benefit.Taxes are trending up now, but tomorrow? In 10 years? In 40 years ? Who knows.
2) Government programs are not guaranteed – just like social security by the time you are able to use your IRA, legislation may have changed the game considerably . why take that risk when you don't have to?
I'd much rather take the bird in my hand than hope the grab the 2 in the bush:)
The moment the government says 'trust us, your money is safe' it's time to run.
"1) you are sure to get the benefit"
What benefit is that? Having those taxes in your account may make your balance larger, but they are only deferred. Uncle Sam is going to get those taxes and any earnings you get from them as soon as you withdraw any money from the account.
With the Roth IRA the taxes are already paid and you get to keep all the money you earn.
The real advantage of the traditional IRA is that you have put off the day of reckoning. You might get lucky, taxes may be lower in the future. You may get unlucky and your taxes will be higher. With the Roth it won't matter.
The thing that you left out of your analysis is growth. If my investments appreciate considerably (one fund I bought is up more than 4X from what I bought).
Now, granted, growth can't be guaranteed, but I'd rather pay tax on the initial investment than pay tax on 4X the value later – a 0 tax rate beats out any difference between 25 and 28.
Brophton -
"I'd rather pay tax on the initial investment than pay tax on 4X the value later "
It doesn't matter which you do. If you didn't pay taxes in advance, you would have more invested and it would all grow by 4X. You will have 4X as much money to pay the deferred taxes. That's why investing the tax savings is critical to making the traditional IRA equivalent to a Roth IRA.
"If you didn't pay taxes in advance, you would have more invested and it would all grow by 4X."
Says who? The limit is $5,500 this year whether I put it in a traditional or Roth IRA. So what if I pay taxes, I can afford to invest to the cap. Why would I be "investing less"? I take money from my checking account, write out $5,500, then decide what I want to invest in – the starting investment is the same.
"You will have 4X as much money to pay the deferred taxes."
But why pay the taxes at all on the growth? Again, I'd rather pay a little tax now and take out the 4X amount tax-free.
"That's why investing the tax savings is critical to making the traditional IRA equivalent to a Roth IRA."
It's negligible compared to the growth. If I pay taxes on $5,000 (rounded for simplicity), then when I retire I can take out the whole $20,000 without taxes – and that's just for a single year. If I do that for 40 years, that's $800,000 that I will take out after paying taxes for $200,000 – that's $600,000 that I won't have to pay taxes on and that is why the Roth is superior. And it will continue to grow during my retirement as I take out just a portion each year.
"I take money from my checking account, write out $5,500, then decide what I want to invest in – the starting investment is the same."
And if you have a Roth you also write out a check for the taxes. If you put $5500 into a Traditional IRA, you pay no taxes and can invest that money instead. Assuming you put all the money in the same investments and your tax rates are the same when you take the money out, your net will be the same.
Of course, you won't get any tax breaks on that extra investment in a normal account. But you may still end up doing better depending on your tax situation. In general, if you max out your contributions, then the lack of tax breaks makes the Roth a better bet.
"And if you have a Roth you also write out a check for the taxes. If you put $5500 into a Traditional IRA, you pay no taxes and can invest that money instead."
You didn't specify that it was for a non-retirement account, which would be a taxed account regardless of which retirement type I used. $1,000 or so per year won't seriously affect how much I put into a brokerage account.
But I don't write out a check for my taxes – it's just taken out of my paycheck each month regardless of which IRA account I choose, after which I get a refund.
"Assuming you put all the money in the same investments and your tax rates are the same when you take the money out, your net will be the same."
Not really. Putting $1,000 or so into a taxable broker account won't make the difference. Assuming the IRA accounts are like I set in my example, the traditional IRA will have a lot more taken out in taxes since all distributions are taxed. With the Roth, my contribution is post-tax and $600K has grown tax-free. Would you rather pay taxes on $200K or $800K+BrokerageAccountTaxes?
"Of course, you won't get any tax breaks on that extra investment in a normal account. But you may still end up doing better depending on your tax situation."
Tell you what – try doing the math. See how much you pay in taxes over 40 years given my example and tell me in the end which you'd rather have.
"In general, if you max out your contributions, then the lack of tax breaks makes the Roth a better bet."
Well, not the lack of tax break, but the lack of tax on distribution that makes the Roth the better choice, assuming that the person makes the contributions and chooses securities that appreciate over time.
Actually the math is easy, but I can't do it for you. Here are how it would have worked for me last year:
$8500 to spend
$6000 in Roth IRA
$2500 in taxes at 25% marginal rate
Assume that my investments in the Roth double by the time I withdraw, I will have $12000
$6000 in Traditional IRA
$2500 saved in taxes used to buy a stock fund that pays no dividends.
Assume again that my investments double and that my marginal tax rate is the same 25% when I withdraw.
$12000 from IRA – $3000 in Taxes for a net of $9000.
$5000 from stock fund sale – $750 in capital gains at 15% for a net of $4250
Total $13,250 after taxes.
In short, you come out $1,250 ahead by deferring the taxes on the IRA and investing them in a taxable account. Of course it depends on your tax situation. You may end up owing very little in taxes on money from your traditional IRA if that is your sole source of income.


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Our economists engage in scholarly research and policy-oriented analysis on a wide range of important issues.
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|May/June 2006Volume 12, Number 4
|JEL classification: R0, R1
Authors: Jason Bram and James Orr
Although NewYork City's payroll employment is rising briskly, it still falls short of its 2001 peak, raising concerns that the local economy is not generating enough jobs. However, a look at a broader set of economic indicators—alternative job measures, wage and salary earnings, and a composite index of economic activity—suggests that the economy is significantly healthier than the payroll count indicates. Indeed, a measure of employment among NewYork City residents shows a strong upward trend extending over the past thirty years.
In the first few years of this decade, NewYork City's economy was hit by a series of adverse shocks: the collapse of the city's fledgling dot-com sector, a severe bear market on WallStreet, a national recession, and the September11 attack on the World Trade Center. Presented with such a scenario in the late 1990s, an economist would no doubt have offered a grim assessment of the city's outlook. Surprisingly, however, these developments have proved to be less damaging to NewYork's economy than might have been predicted. Nevertheless, there continues to be concern about the current state of the local economy—in particular, concern that several years into the recovery, payroll employment in the city has not yet reached its January 2001 cyclical peak.1 In the eyes of some commentators, the failure of this widely followed indicator to regain its earlier high level signals a fundamental problem with the local economy's ability to create new jobs.2 Deepening the concern are longer-term trends in payroll employment: NewYork City's job count has never returned to the peak levels of 1969, even at the height of the 1990s boom.
In this issue of SecondDistrict Highlights, we assess the overall health of the city's economy and address the concerns about the strength of the city's recovery. We begin by examining payroll employment trends in the city's private sector. Our analysis attributes much of the shortfall in the payroll figures to the extraordinary run-up in the city's employment in the late 1990s and to the relatively slow recovery of employment nationally rather than to any fundamental weakness unique to the local economy. In the second part of our study, we look beyond the payroll employment measure to examine a variety of economic indicators—wage and salary earnings, a composite index of city economic activity, and alternative employment measures—that together provide a fuller picture of NewYork City's economy. These indicators suggest that the local economy is a good deal stronger and more resilient than the payroll employment measure alone would imply.
Recent Trends in Payroll Employment in NewYork City
As of May 2006, nearly three years into the jobs recovery, the city's economy and labor market are looking considerably stronger, but private sector employment remains roughly 100,000 below its peak in early 2001. Although the rate of job creation has picked up in the past year, even at the current pace it would take another year and a half to close this employment shortfall and return employment to its 2001 peak.3
At first glance, the shortfall might seem to reflect some persistent adverse effects of the September11 attack, which not only reduced the city's supply of available office space but also increased—at least in the short run—the perceived risk of doing business or living in NewYork City. However, there is little evidence that the attack has had a lasting negative effect on city employment.4 When we compare the city's actual monthly employment levels in the post-attack period with an econometric simulation of the path that employment would have taken had the attack not occurred,5 we find that job levels dropped significantly below the simulated, or "counterfactual," path for many months but were roughly back on track by the end of 2002 (Chart2). This finding suggests that the employment disruptions of the September11 events had largely been resolved within a little more than a year of the attack. It also suggests that sluggishness in job creation occurring after 2002 has most likely been unrelated to the attack. (See the box for a discussion of the simulation exercise.)
To explore other reasons that the city's employment level has not returned to its 2001 peak, we consider three distinctive features of the payroll employment trends of the past ten years. First, we suggest that the current shortfall in jobs must be understood in the context of the expansion that preceded it. The late 1990s represented a period of extraordinary economic strength for the nation, and especially for NewYork City. Employment in the city, driven largely by the boom on WallStreet and in the dot-com sector, expanded at a 2.5percent pace in 1998—the strongest rate of growth since records began in 1950—and grew even more rapidly in both 1999 and 2000. The city's unemployment rate, which had approached 10percent in early 1997, had fallen to 5.5percent by late 2000; over the same period, the nation's unemployment rate fell by just slightly more than 1percentage point. Thus, in 2001, when NewYork City was beset by a series of negative shocks, its labor market was extraordinarily tight—tighter, perhaps, than in almost all earlier periods. Given the prevailing conditions, the payroll employment downturn that began in 2001 can be interpreted in part as a reversion to trend—that is, a return to more "normal" job levels.
Second, the slow initial pace of the city's employment recovery was consistent with that experienced by the nation. In the UnitedStates, as in NewYork City, employment did not hit bottom until mid-2003, or more than one and a half years after the 2001 national recession technically ended. The delay led many observers to describe the country's emergence from the recession as a "jobless recovery" (see Groshen and Potter[2003]). Indeed, while economic growth in most national or local recoveries is largely manifested in job gains, the recovery from the 2001 recession was driven almost entirely by productivity growth, with brisk job increases occurring only after the beginning of 2004. In this respect, NewYork City's weak employment trends of 2002 and 2003 appear to have been part of a broader national phenomenon.6
Third, the magnitude of the current shortfall in payroll jobs might actually be smaller than one would expect on the basis of NewYork City's "potential" rate of growth—the long-run average rate of growth that the city can maintain given existing trends in population and industry growth. Historically, job growth in New York City has averaged roughly 1 to 2 percentage points below national job growth—a differential that largely reflects the geographic constraints on NewYork's population growth and the fact that the city is already a mature economy. Despite this difference in potential growth rates, the rate of payroll job growth in the city has for the past two years matched or exceeded the nation's, averaging 1.7percent. Had the city's payroll employment expanded instead at a slower rate in keeping with its long-term average, the shortfall in jobs would have been still greater.
Overall, our look at the payroll employment trends in New York City suggests that the job counts of recent years are less worrisome than they might appear. While employment has not returned to its 2001 peak level, this shortfall seems understandable in light of earlier employment patterns and does not appear to signal fundamental problems with the city's economy. In the next section, we look beyond the payroll employment numbers to other measures of economic performance to obtain a broader perspective on the current health of the city's economy.
Alternative Indicators of Local Economic Health
To address this and other drawbacks of relying solely on the payroll measure, we look at two alternative indicators of economic performance that offer a broader picture of the state of the city's economy. First, we analyze trends in total and average earnings—an indicator that is a good gauge of output. Second, we examine trends in the NewYork City index of coincident economic indicators, a composite measure of economic activity that is released monthly by the Federal Reserve Bank of NewYork.
Income as a Proxy for Economic Activity
The existing measures of local area income differ in the components of income included, the population—workers or residents—whose income is counted, and the frequency with which the findings are made available. In this analysis, we focus on estimates of wage and salary earnings, which are available quarterly at the county level and thus for NewYork City as a whole.7 This measure captures earnings generated by workers in the city but does not count income earned by the self-employed, including business proprietors.8 The measure also excludes components of income not directly tied to city production, such as dividends and capital gains.
Like payroll employment, wage and salary earnings declined sharply from early 2001 to early 2003. While payroll job losses were considerably milder in 2001-03 than in the 1989-92 downturn, earnings—led by a steep drop in financial sector income—fell much more precipitously in the recent period than in the earlier downturn (Chart3).9 In the past three years, however, wage and salary earnings have rebounded briskly, consistent with a healthy recovery.
Moreover, over the full cycle (from the mid-1990s to the present) earnings have grown at about the same pace in the city and the nation, even as NewYork's job growth has lagged. This parity has existed for some time: local income growth has tracked national growth, on average, since the early 1980s. And because employment has grown more slowly in NewYork City than in the nation over the cycle, average earnings per worker have actually risen slightly relative to the national average (Chart 4).
The CEI is used to track activity in the NewYork City economy and to date and characterize the city's business cycles.13 Like payroll employment, the index peaked in 2001 and declined fairly sharply through 2003 (Chart5). It then climbed gradually, reflecting the relatively drawn-out recovery of activity over the past three years. What is most significant, however, is that unlike payroll employment, which remains well below its 2001 peak, the CEI for NewYork City in January 2006 eclipsed its previous cyclical peak. Thus, the state of the city's economy as captured by this index supports the notion that a broader assessment of economic conditions reveals a relatively healthy expansion.
Other Perspectives on the City's Job Growth
To get a clearer sense of the pace of job growth in the current expansion, we compare movements in the payroll employment series with movements in two alternative measures of employment14—the total employment series from the Bureau of Economic Analysis' Regional Economic Accounts (referred to as the BEA measure in this article) and the employed persons series from the Bureau of Labor Statistics' Local Area Unemployment Statistics program (known as the household survey). These alternative measures focus on different sample populations than the payroll employment series and may therefore capture trends that the payroll series overlooks.
The payroll employment series counts the jobs of those workers who receive salaries and are covered by unemployment insurance. This population represents the vast majority of workers but excludes business proprietors and other self-employed workers. The BEA measure of employment, by contrast, offers a total job count that includes the self-employed. Because the BEA data are reported only annually and with a two-year lag, they are rarely used in the analysis of current conditions. However, a look at movements in the series suggests that the BEA measure may, over the long term, provide a corrective to the picture of job growth presented by the payroll series (Chart6). The BEA measure charts a path for overall employment that is higher than that outlined by the payroll measure and closer to its previous cyclical peak. The divergence of these two paths suggests that the group of workers excluded from the payroll employment series have been expanding rapidly and that their omission from the payroll series may cause a downward bias in reported job growth.
The household survey exhibits a more positive growth trend over the past thirty years than either the payroll employment series or the BEA measure (Chart6). Once again, the difference likely reflects the divergent populations targeted by the three series. The household survey counts the number of city residents who are employed, while the payroll and BEA measures count the number of jobs in NewYork City. The household series began to pull away from the other two measures in the early 1990s and in 2005 stood more than 10percent above its 1969 level. Moreover, based on annual average employment levels, the household series does not show a shortfall in employment—the 2005 level exceeds its 2001 cyclical peak.
Ongoing trends in commuting patterns may explain why the household survey presents a more favorable picture of job growth than either the payroll or the BEA measure. In recent years, the proportion of metro area workers who commute from the suburbs into the city has declined (although it remains sizable) and the number who reverse commute from NewYork City has grown.15 This decreasing net inflow of commuters implies that the number of jobs located in NewYork City has expanded less rapidly than the number of NewYorkers with jobs. In many ways, the more rapid growth of employment among residents of the city more accurately portrays the well-being of, and opportunities available to, New Yorkers.
Significantly, each of our alternative measures suggests that the city's current recovery is much healthier than the payroll employment measure alone would imply. In addition, over a longer horizon, these same measures provide persuasive evidence that concerns about the continuing failure of payroll employment to climb back to its 1969 high may be unwarranted. Measured in terms of income, NewYork City's economy has grown at close to the same pace as the national economy since the early 1980s. With average income per worker rising faster locally than nationally, it appears that productivity may be advancing at a faster rate in the city than in the nation. Moreover, both the BEA and household measures of employment have in fact trended upward over the past thirty years and, in clear contrast to the payroll series, now surpass their 1969 levels.
1. The payroll employment series is based on the U.S. Bureau of Labor Statistics' Current Employment Statistics (CES) Survey. The survey, conducted monthly, counts nonagricultural wage and salary jobs in the private and public sectors; it excludes the self-employed. Unless otherwise noted (as in the section on alternative employment measures), the discussion of payroll employment in this article is limited to movements in private sector employment.
2. See, for example, StevenMalanga, "Gotham Stalls Out," NewYorkSun, July27, 2005; "Two Years On," The Economist, September13, 2003; and DinaTemple, "Bloomberg Vows to Push Property Tax Cut," NewYorkSun, December2003.
3. Even at that point, private sector employment would still be 50,000 below its 1969 level.
4. While this paper focuses on the economic effects of the September11 attack, we acknowledge that the most profound impact of the attack was the extensive loss of life.
5. To calculate how employment would have evolved in the absence of an attack, we used the trend in city employment in the months leading up to September11, U.S. employment data for the periods before and after the attack, and data on the historical relationship between local and national employment. We conducted a similar exercise in an earlier study (Bram, Orr, and Rapaport 2002). Although we used somewhat different assumptions and had more limited data in the earlier study, we obtained comparable results.
6. Economists examining the slow growth of employment after the most recent national and NewYork State recessions have argued that structural change—permanent shifts in the industry distribution of workers in the economy—played an unusually large role in hampering the recovery of jobs in 2002 and 2003 (see Groshen, Potter, and Sela[2004]). Since NewYork City employment has closely tracked statewide employment, it is reasonable to assume that this finding applies to NewYork City as well.
7. We use quarterly estimates of wage and salary earnings from Moody's Economy.com; these estimates are based on annual wage and salary data from the Bureau of Economic Analysis. For the most recent quarters, which are not yet covered by annual data, estimates are based primarily on insured wage and salary earnings from the Bureau of Labor Statistics' Quarterly Census of Employment and Wages (QCEW) program.
8. We use wage and salary earnings in this analysis because they are available on a more timely basis than the Bureau of Economic Analysis' broader income measure (which includes the self-employed). Income accruing to the self-employed grew at roughly the same pace as wage and salary earnings between 1995 and 2004 (the latest year available).
9. The more recent decline in earnings followed a surge in earnings in 1999 and 2000. Indeed, what is most remarkable is not how low income was in 2003 but how high it was in 2000. Such dramatic fluctuations in earnings are understandable given the dominance of NewYork City's financial industry, which directly accounts for nearly 30percent of the city's total wage and salary earnings (see Bram and Orr[1999]). Because variable pay (in the form of bonuses) makes up a large share of financial sector earnings, wage and salary swings tend to be much more pronounced at the local than at the national level.
10. The construction of indexes for NewYork State, NewYork City, and NewJersey is described in Orr, Rich, and Rosen(1999).
11. Although the data on real earnings, unlike the data for the index's other three components, are not available at a monthly frequency, the methods used to construct the index can generate monthly earnings observations.
12. See the index estimated for Massachusetts in Clayton-Matthews and Stock (1998/1999) and for Pennsylvania, NewJersey, and Delaware in Crone(2000). Separate indexes have been estimated for all fifty states by Crone(2003).
13. The CEI for New York City has been shown to improve forecasts of city sales and withheld personal income taxes. See Rich, Bram, Haughwout, Orr, Rosen, and Sela(2005).
14. For purposes of comparison, payroll employment in this section encompasses jobs in both the private and public sectors.
15. See Bram and McKay (2005).
Bram, Jason, and Alisdair McKay. 2005. "The Evolution of Commuting Patterns in the NewYork City Metro Area." Federal Reserve Bank of NewYork Current Issues in Economics and Finance11, no.10 (October).
Bram, Jason, and James Orr. 1999. "Can NewYork Bank on WallStreet?" Federal Reserve Bank of NewYork Current Issues in Economics and Finance5, no.11 (July).
Bram, Jason, James Orr, and Carol Rapaport. 2002. "Measuring the Effects of the September11 Attack on NewYork City." Federal Reserve Bank of NewYork Economic Policy Review8, no.2 (November): 5-20.
Clayton-Matthews, Alan, and James H. Stock. 1998/1999. "An Application of the Stock/Watson Index Methodology to the Massachusetts Economy." Journal of Economic and Social Measurement25, no.3-4: 183-233.
Crone, Theodore M. 2000. "A New Look at Economic Indexes for the States in the ThirdDistrict." Federal Reserve Bank of Philadelphia BusinessReview (November-December).
_____. 2003. "Consistent Economic Indexes for the 50 States." Federal Reserve Bank of Philadelphia Working Paper no.02-7.
Groshen, Erica, and Simon Potter. 2003. "Has Structural Change Contributed to a Jobless Recovery?" Federal Reserve Bank of NewYork Current Issues in Economics and Finance9, no.8 (August).
Groshen, Erica, Simon Potter, and RebeccaJ.Sela. 2004. "Economic Restructuring in NewYorkState." Federal Reserve Bank of NewYork Current Issues in Economics and Finance10, no.7 (June).
Orr, James, Robert Rich, and Rae Rosen. 1999. "Two New Indexes Offer a Broad View of Economic Activity in the NewYork-NewJersey Region." Federal Reserve Bank of NewYork Current Issues in Economics and Finance5, no.14 (October).
Rich, Robert, Jason Bram, Andrew Haughwout, James Orr, RaeRosen, and RebeccaSela. 2005. "Using Regional Economic Indexes to Forecast Tax Bases: Evidence from NewYork." Review of Economics and Statistics87, no.4 (November).
About the Authors
|Chart 1
Private Sector Employment: New York City and the Nation
Sources: U.S. Department of Labor, Bureau of Labor Statistics; Moody's Economy.com.
Note: All data are seasonally adjusted.
|Chart 2
New York City's Private Sector Employment: The Effect of the September 11 Attack
Sources: New York State Department of Labor; Moody's Economy.com; FRBNY staff estimates.
Note: All data are seasonally adjusted.
aRepresents the estimated path that private sector employment would have taken if the September 11 attack had not occurred.
| Estimating the Effect of September 11 on the Path
of Employment
To estimate the employment effects of the September 11 attack, we use time-series regression techniques to simulate the path that employment would have taken if the attack had not occurred. The equation used to simulate private sector employment is as follows:
where ê is the estimated growth rate of New York City employment and E is the actual growth rate of U.S. employment outside New York City. Both employment variables are in log difference form, which is a measure of percentage change.
We first estimate the historical relationship between current city job growth and its own lagged—or past—values, as well as contemporaneous and lagged values of U.S. job growth outside NewYork City, by running a regression on actual data from January 1979 to August 2001. Next we use the estimated coefficients from that regression (, , and ) to simulate sequentially the city's employment growth for each month subsequent to August 2001, using contemporaneous U.S. job growth outside New York City as well as eight lagged values of job growth for both the city and the rest of the nation. These simulated values of city employment growth are fed back into the equation in place of actual lagged values for periods after August 2001. Simulated employment levels are then derived from the series of simulated percentage changes. The simulation is done through the first half of 2003, a point in time when the actual and simulated levels had moved closely together for a number of months.
The simulated path of employment is sensitive to a number of assumptions, which are briefly outlined below. A more thorough discussion of the logic and implications of these various assumptions can be found in Bram, Orr, and Rapaport (2002). In that earlier study, we varied the mix of assumptions to generate two scenarios—the first premised on a high impact from the attack and the second on a low impact.
Number of lags used: For this study, we use an eight-lag autoregressive model. A model using significantly fewer lags would fail to capture longer-term dynamics and would tend to show employment snapping back to a positive trend fairly quickly.
Start date of the simulation: Our simulation does not use actual data for September 2001. Although most of the attack's effect on employment began in October 2001, the September 2001 data may have been influenced by the attack. Because September's job decline in both the city and the nation was steeper than the prior trend, our decision to exclude the extra month of actual data mitigates the downward trajectory of simulated employment and thus increases the estimated impact of the attack.
Exclusion of New York City from the U.S. data: In this study, we exclude New York City from the U.S. data. Our rationale is that any positive employment effects—say, those stemming from the relocation of jobs to New Jersey—would be more than offset by negative employment effects in travel-related industries across the nation. As it turns out, however, we find that the city represents such a small share of U.S. jobs that our decision does not materially affect the simulation outcome.
|Chart 3
Total Wage and Salary Earnings:
New York City and the Nation
Sources: U.S. Department of Commerce, Bureau of Economic Analysis; Moody's Economy.com; FRBNY staff calculations.
Notes: All data are seasonally adjusted. Earnings are nominal.
|Chart 4
The New York City Premium: Average Earnings per City Worker as a Percentage of the U.S. Average
Sources: For earnings, U.S. Department of Commerce, Bureau
of Economic Analysis; for total employment, U.S. Department
of Labor, Bureau of Labor Statistics.
Note: The ratio is based on nominal earnings of wage and salary workers in New York City and the nation.
|Chart 5
Index of Coincident Economic Indicators for New York City
Source: Federal Reserve Bank of New York.
Note: For more information on this index, see Federal Reserve Bank of New York, http://www.newyorkfed.org/research/
|Chart 6
Annual New York City Employment:
Alternative Measures
Sources: U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Department of Labor, Bureau of Labor Statistics; FRBNY staff estimates.
The views expressed in this article are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.


text:
Originally Posted by Canadian Crippler
Aint that the truth.
Originally Posted by Canadian Crippler
Aint that the truth.
Bigger legs, say the 33 inch ones i have make you spend 15$ on every pair of underwear you have. The middle part of my legs ( the quads I think they are... not sure ) are 32 3/4" around.
Your body strives for balance, so the bigger your legs get, the bigger your wang gets. I heard Brent Mikesell has a 18" wang.
That's just what I heard though.
Stats: Age: 34 Weight: 205 Height: 5'6"
Gym PRs: Squat:635 Bench:560 Deadlift:495
Meet PRs: Squat:575 Bench:525 Deadlift:510 Total: 1605@220
Each of your legs are 3/4" wider than my waistOriginally Posted by WBBIRL


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Since the beginning of 2011, Vietnam has been regarded as an emerging nation. In the period 1998–2008, trade between Switzerland and Vietnam increased fivefold. In 2011, the volume of trade between Switzerland and Vietnam was approximately 1.4 billion CHF, with Vietnam enjoying a surplus of 857 million CHF. Since May 2012 negotiations have been underway to draw up a free trade agreement between EFTA and Vietnam.
Scholars and artists from Vietnam can apply to the State Secretariat for Education, Research and Innovation (SERI) for a Swiss Government Excellence Scholarship.
Switzerland and Vietnam have been conducting a human-rights dialogue since 1997. Political discussions within the framework of this dialogue are linked to technical projects. The last round of talks took place in May 2012 in Bern.
Since the beginning of the 1990s, Vietnam has been one of the key recipient countries of Swiss development aid delivered under the "Mekong" regional programme. This program is jointly managed by the State Secretariat of Economic Affairs (SECO) and the Swiss Agency for Development and Cooperation (SDC).
At the end of 2011, there were 566 Swiss nationals resident in Vietnam, of whom 207 hold dual citizenship.
In 1926 Switzerland opened a consulate in Saigon, and in 1958 a general consulate.
After the war in Indochina came to an end in 1954, the peace negotiations were held in Geneva. Until the outbreak of the Vietnam War, Switzerland already maintained relations with the non-communist South. During the war Switzerland provided both South and North Vietnam with humanitarian aid. In 1971 – before the end of the war – Switzerland established diplomatic relations with the Socialist Republic of Vietnam. Switzerland was one of the first western countries to do so.
In 2000, Vietnam opened an embassy in Bern. The first official visit of a Swiss President took place in August 2008. In 2011, Vietnam and Switzerland celebrated 40 years of diplomatic relations.


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Here's your chance to share a photo of your favorite tractor.
This 1949 John Deere A is the Cover Tractor of the Month for November in Fastline's Far West Ag Edition.
The tractor is owned by Jimmie Kegley. Learn more in the digital Fastline edition.
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Join 500,000+ Artists
Its' free and it takes less than 10 seconds!
Here's a short clip I made with some weird characters I created. It's made to look like the title sequence for a TV show.
The last image sequence of Ashtray Kiss is kinda muddled and you never really see her. I can see that making sense for the character but being the last one ends the whole video flat?
Your website setup is prettycrappy but found it fun, interesting drawings on there.
Ashtray Kiss was the hardest part to make, and maybe I made it a bit too dark and smoky. As you wrote, it does make sense for the character, but maybe at the expense of being too muddled. I really like the hazy atmosphere of that part though, but I'll try to fix some of it.
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Cuba Libre is a latin rhythm track useful for all situations where you need Brazil, Samba, Bossa Nova or Mambo kind of music. Easy to go with lots of percussion, natural Contra Bass, Semi Acoustic Guitar and a rhytmic E-Piano. The main stream is a unique Paino chord melody you will allways remember.
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WAUSAU, Wis. (WSAU) – Jobless rates fell in central Wisconsin from July to August despite a slightly higher statewide unemployment rate.
The seasonally unadjusted jobless rates were lower in Marathon, Lincoln, Portage and Wood counties on a month-to-month basis and compared to August 2010.
The statewide average went up from 7.8 percent in July to 7.9 percent in August because of worries about the European debt crisis, volatile financial markets and political wrangling in Washington about how to reduce the nation's deficit.
The rate dropped in Marathon County from 7.7 percent in July to 7.4 percent last month because the private sector has added 600 new jobs over the last year, said state workforce development economist John Westbury. During the same time, the manufacturing sector has added 900 jobs and the leisure and hospitality sector has added 200 jobs.
In the city of Wausau alone, the jobless rate fell from 10.4 percent in July to 10.1 percent in August. The same time last year, the jobless rate was 11.7 percent. Among 31 cities that are surveyed, Wausau's jobless rate was the seventh highest last month.
Westbury was unable to explain why the jobless rate in Lincoln County had fallen from 10.8 percent in July to 9.5 percent in August. He said more specific information about economic trends would not be available for six months. The county still had the third highest jobless rate among counties in the state last month.


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The Planetizen Guide to Graduate Urban Planning Programs is the only comprehensive ranking and listing of graduate urban planning programs available. In its 3rd edition, the guide is exhaustively researched by the staff of Planetizen. Thousands of students have used the Guide to inform their decision on which graduate programs to apply to, and ultimately, attend.
School Profile and Ranking by Geographic Region Sample Pages
The Planetizen 2012 Guide to Graduate Urban Planning Programs (ISBN 978-0-9789329-1-6) is published by Planetizen Press.
Copyright 2011 by Urban Insight, Inc. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher. All content included in this book, such as text, graphics, logos, images, and data compilations is the property of Urban Insight, Inc. or its content suppliers and is protected by United States and international copyright laws.
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