Monthly Archives: April 2021

When Should You Take Annual Payments Instead of a Lump Sum?

$100 Banknotes by Pepi Stojanovski via Unsplash -

Imagine this scenario. You are offered the opportunity to take a one-time lump sum payout or an annual payment for the rest of your life. Which option should you choose?

That's a scenario that may play out several times during your life. Sometimes it will be an employer who offers that deal with the company's retirement plan. If you're lucky, it may be a state lottery commission.

If you're like 70% of Americans who were offered that choice for their employer's pension plan in recent years, you will likely choose the lump sum cash offer. But is that the best choice? How can you find out?

If you want to boil it down to a single number without taking other considerations into account, you could base your decision on a figure called the pension income ratio. Simply take the amount of the annual payout you have been offered and divide it by the amount of the lump sum payout you've been offered as an alternative.

Let's do that math with an example in the following tool. If you're reading this article on a site that republishes our RSS news feed, you may need to click through to our site to access a working version of it.

Cash Payout Options
Input Data Values
Lump Sum Payout
Annual Income Payout

Can You Beat This Number?
Calculated Results Values
Pension Income Ratio

Now, think about what kind of annual rate of return you could reliably get from investing the lump sum payout. If your result from the tool above is higher than that rate, you might be better off choosing the annual income payout over the lump sum.

Most financial planners will use a rate of return of 6.0% as the rule-of-thumb threshold for choosing which option is better, but a more conservative approach would be to use a lower figure.

For the default numbers in the tool, the result of 6.7% is higher than the 6.0% threshold, which would suggest the better option is to go with the annual income payments. Most financial planners would agree that rate of return would be difficult to average over a long period of time.

But what if the offer for the annual income payments was lower? What if it was $35,000 instead?

That figure would drop the pension income ratio down to 4.7%, where taking the lump sum would become more attractive.

There are other factors that can affect the decision of which choice is better (such as your age, health, etc.) but the idea here is to use the pension income ratio as a starting point for those additional considerations.

For more discussion, check out Michael Aloi's recent article on how a math formula drives one retiree’s choice and Wes Moss' article on the question of whether you should take a lump sum payout or a pension. And of course, our own 2015 article on whether you should take a pension buyout, which was a very topical question that year!

Image credit: Photo by Pepi Stojanovski on Unsplash

Visualizing ICL’s Pandemic Model’s Failures


We called the failure of Neil Ferguson's Imperial College London (ICL) epidemiological model to reasonably project the severity of the coronavirus pandemic The Biggest Math Story of 2020. Now, armed with a year of actual outcomes to compare with its projections, analysts are able to quantify just how badly off the mark it was.

One year later we may now look back to see how Imperial College’s international projections performed, paying closer attention to the small number of countries that bucked his lockdown recommendations. The results are not pretty for Ferguson, and point to a clear pattern of modeling that systematically exaggerated the projected death tolls of Covid-19 in the absence of lockdowns and related NPIs.

The acronym NPI refers to Non-Pharmaceutical Intervention, which refers to things like the lockdown measures many governments enacted, including ordering businesses to close and residents to stay-at-home for sustained periods of time. It also covers practices such as wearing face masks or practicing social distancing for the purposes of trying to limit the spread of SARS-CoV-2 coronavirus infections.

Ferguson's ICL model was used to make several kinds of projections representing different scenarios at the pandemic's one-year mark.

These projections reflect an assumed replication rate (R0) of 2.4 – the most conservative scenario they considered, meaning Imperial’s upper range of projections anticipated substantially higher death tolls. The countries examined here – Sweden, Taiwan, Japan, and South Korea – are distinctive for either eschewing lockdowns and similar aggressive NPI restrictions entirely or for relying on them in a much more limited scope than Imperial College advised. The United States, where 43 of 50 states adopted lockdowns of some form, is also included for comparison.

At the time the ICL model's projections were generated, the assumed replication rate (R0) for estimating how aggressively the coronavirus might spread had been estimated to fall within a range between 2.2 and 2.7, although a CDC estimate was much higher than that.

Still, using the same assumption for all these countries provides an apple-to-apples means of comparing the projections of COVID-19 deaths for each. We've visualized that tabulated data in the following chart.

How Well Did the Imperial College London (ICL) Pandemic Model Perform in Forecasting COVID-19 Deaths After One Year? Number of Predicted and Reported COVID-19 Deaths

In this second chart, we've recalculated the projected and actual recorded COVID-19 deaths as a percentage of each country's estimated July 2020 population. This modification lets us account for the large differences between each country's population with the others.

How Well Did the Imperial College London (ICL) Pandemic Model Perform in Forecasting COVID-19 Deaths After One Year? COVID-19 Deaths as Percent of Estimated Population in July 2020

The visualized results confirm Neil Ferguson's ICL epidemiological model deviated anywhere from multiples to multiple orders of magnitude from reality. That matters because the ICL model was used to justify restrictive measures that harmed many people's livelihoods and well-being. It will take years to recover from the resulting disruption.

Just over one year ago, the epidemiology modeling of Neil Ferguson and Imperial College played a preeminent role in shutting down most of the world. The exaggerated forecasts of this modeling team are now impossible to downplay or deny, and extend to almost every country on earth. Indeed, they may well constitute one of the greatest scientific failures in modern human history.

That potential is what earned the failure of Neil Ferguson's ICL pandemic model the title of The Biggest Math Story of 2020.


Magness, Phillip W. The Failure of Imperial College Modeling Is Far Worse than We Knew. American Institute for Economic Research. [Online Article]. 22 April 2021.

U.S. Central Intelligence Agency. Population Estimates (July 2020). The World Factbook. [Online Data]. Accessed: 6 January 2021.

U.S. New Home Market Cap Nearing 2005 Nominal Peak Bubble Levels

In August 2005, the market capitalization of the new home market peaked at $31.05 billion, going by the trailing twelve month average for this figure.

In January 2021, fueled by a surge in demand by Americans fleeing coronavirus pandemic lockdown restrictions and amplified by sustained breakdowns of public order in large cities in the U.S., the market cap of the new home market reached $30.32 billion, just 2.4% shy of the housing market's previous nominal peak.

Trailing Twelve Month Average New Home Sales Market Capitalization, Not Adjusted for Inflation and Adjusted for Inflation, January 1976 - March 2021

Since January 2021 however, the trailing twelve month average market cap for new homes in the U.S. has fallen somewhat, dropping to $29.91 billion in the initial estimate for March 2021, as the supply of new homes sold has increased while the average price of new homes sold in the U.S. has dipped from a six-year high in January 2021.

Adjusted for inflation, the market cap for new homes now would have to be over a third higher to come close the August 2005 peak in terms of constant March 2021 U.S. dollars.


U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 April 2021. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 April 2021. 

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100[Online Application]. Accessed 13 April 2021. 

Australian Politics 2021-04-28 08:50:00


Cricketers want a lot

Australian batsman Chris Lynn above -- pictured with partner Karlie. If I were "stranded" in India with Karlie I don't think I would be feeling too sad about it

When I read that Brisbane Heat captain Chris Lynn had asked the Australian Cricket Board to organise and pay for a charter flight to repatriate Australians playing in the Indian Premier League, I couldn't believe my eyes.

Especially when Lynn also revealed that he and other IPL players were jumping the queue to receive COVID jabs next week.

And it got worse. It turned out that Lynn had made his request before prime minister Scott Morrison's announcement on Tuesday that all flights from India to Australia had been cancelled following over 350,00 positive cases of COVID being recorded the previous day.

So he wasn't even saying that he and his 16 fellow IPL mercenaries needed an emergency airlift to escape immediately from virus-ravaged India.

He was requesting that the flight be arranged to take off after the IPL finishes next month.

Or, put another way, after the likes of Lynn, Smith, Warner, Pat Cummins, Glenn Maxwell and co have collected their full pay packets. And hefty pay packets they are too.

Cummins' contract is worth $3.16 million, Maxwell is on $2.52 million, Warner $2.3 million, and Chris Lynn $406,000.

And incredibly, they are still getting it, with the IPL continuing to be played and generating enormous amounts of money while bodies are lining up on the streets of Indian cities and towns.

Yet Lynn is crying poor. His reasoning being that the ACB takes a 10 percent cut of all Australian IPL contracts, meaning a commission this year of just over $1.6 million.

That's money that goes towards funding junior cricket and to insure against the risk of Australia's top players being injured while playing in a privately run competition amongst other things, but which he believes could be best spent flying some of Australia's highest-paid athletes home from India.

Well here's another idea, maybe the players could spend some of $16.3 million they are picking up for less than two months work on paying for their own flights.

After all, Lynn and the others chose to travel to India during a pandemic to reap the rich rewards on offer.


Police minister calls for teacher to be sacked from primary school where students were 'brainwashed' into making Black Lives Matter posters saying 'stop killer cops' and 'pigs out of the country'

A primary school teacher who instructed students to make anti-police posters in which officers were called 'pigs' should be sacked, NSW Police Minister David Elliott said.

Pupils in Years 5 and 6 at Lindfield Learning Village in Sydney's north made placards with the words 'stop killer cops' and 'pigs out of the country', slogans which have featured in the Black Lives Matter movement in the US.

Others read: 'white lives matter too much' and 'you can't silence the speechLess'.

A furious Mr Elliot called for the teacher involved to be stood down for demonising brave police officers.

'The headmistress should be fronting the media today to explain why taxpayers' dollars are being spent to educate children in this manner,' he told 2GB radio on Wednesday morning. 'They have completely let their student body down by indoctrinating and brainwashing them,' he added.

'We are supposed to be telling our kids that if you wear a uniform you're a hero and teaching these kids the history of Australia is one of tolerance and sacrifice and courage and then we get this crap stuck to us.

'If my kid was at this school I'd want my money back and I'd be getting my kid out of there.'

Mr Elliot apologised to the parents of police officers. 'We don't think that your children are pigs, we think your children are fantastic,' he said. 'Police haven't done anything wrong, they are the pillar of our society. This sort of mentality has no place in Australia.'

Host Ben Fordham said the teacher should be sacked and Mr Elliot said: 'That's right.'

Mr Elliot later spoke about the incident on Nine's Today show where he slammed 'ideologues that work in the education department'.

'Children don't need the police built up as some sort of bogey man which is what we're seeing with this indoctrination,' he said.

Images of the posters were shared on social media and featured in the Daily Telegraph which broke the story on Tuesday night.

Education Minister Sarah Mitchell told the newspaper she would launch a review to find out how this happened.

'These posters should not be displayed in a classroom. Any teacher found to be politicising a classroom will face disciplinary action. 'Political activism has no place in a school,' she said.

Black Lives Matter is a movement founded in the US in 2013 to protest about some high-profile incidents of black men being killed by police.

It came back to prominence after George Floyd was killed by a police officer who in Minneapolis, Minnesota last year.

That officer Derek Chauvin was found guilty on Wednesday morning Australian time of murdering Mr Floyd by leaning on his neck for nine and a half minutes on May 25.

The BLM movement spread to Australia where Indigenous rights activists held marches in major cities last winter.

One Nation's NSW Legislative Council MP Mark Latham backed calls for the teacher to be sacked, and said the principal should also be dismissed.

'For a student to be saying 'white lives matter too much' and for the teacher to display it in the classroom is appalling,' Mr Latham said.

'It is not education it is indoctrination, they’re polluting the minds of little kids. It is not humanity, it is not compassion, it is a warped mutant ideology shoved down the throats of little kids.'

Lindfield Learning Village was established in 2019, with children not required to wear uniforms, and with no structured lessons or classrooms but instead using open-learning spaces.

The Learning Village said its education model was based on 'three archetypal learning spaces – the campfire, cave, and watering hole – that schools can use as physical spaces and virtual spaces for student learning.

'Our approach is designed to create independent, resilient learners who possess the learning dispositions required for success in their life within and beyond school.'

The school's stated 'Code of Collaboration' vows to 'listen actively and challenge each other's ideas to help them grow'.

'We will notice what is not being said and enable all voices,' the code reads.

The controversy came just a month after the school held Harmony Day 2021 in which students and staff were encouraged to wear orange or 'cultural dress' and to make donations to the Asylum Seeker Resource Centre's Feast for Freedom.


Angus Taylor says Australia won’t ‘declare war’ on industry to cut emissions

Prime Minister Scott Morrison will address a virtual climate summit on Thursday evening as industrialised nations declare their intention to drastically reduce emissions.

The federal government has avoided joining the UK, the US, and other major powers in committing to a net zero emissions target by 2050 but has claimed it remains on course to reach a 26 or 28 per cent reduction by 2030.

Energy Minister Angus Taylor insisted Australia would not “declare war on industry” in order to reach more ambitious goals.

“Technology is the key. It’s always been the key of humans solving hard problems and it will be the case,” he told ABC radio on Thursday. “The goal here is not to declare war on an industry.”

The European Union in December declared its intentions to slash emissions by 55 per cent by 2030, while US President Joe Biden was expected to use the summit to announce a 50 per cent target by that date.

That would follow a commitment this week from the UK to cut emissions by 78 per cent within 14 years in what Westminster described as “the world’s most ambitious climate target”.

But Mr Taylor rejected suggestions Australia was in danger of falling behind the rest of the industrialised world. “Politicians’ promises are one thing (but) delivery is what counts. There are lots of countries that have made promises in the past and pulled out … What counts, at the end of the day, is delivery,” he said.

And Mr Taylor claimed Australia aimed to surpass its comparatively low emissions reduction target, which he described as “always a floor … not a cap” on its ambitions. “We always shoot to meet and beat our targets. That’s exactly what we seek to do, but we deliver,” he said.

“So set the bar low and then over-deliver. Is that it, minister?” asked host Fran Kelly.

Mr Taylor said Australia had over-delivered on its Kyoto targets despite public scepticism.

But clean energy groups say the claim was based on a credit claimed in the early 1990s based on a reduction in land clearing, but Australia had since allowed fossil fuel use to grow.

The federal government on Wednesday unveiled a $539m plan to boost hydrogen and carbon capture technology as part of the May budget, along with $565.8m towards international low emissions technology partnerships.

The Energy Minister was pressed on whether the hydrogen spruiked by the government would be made with fossil fuels. Mr Taylor said hydrogen would be made with “anything that allows us to reduce emissions”. “You know what: If it’s zero emissions, it’s fine. That’s the point. It’s got to be clean,” he said.

Labor frontbencher Tony Burke demanded the government follow the rest of the industrialised world by committing to a net zero target by 2050.

“It needs to happen. It’s in the national interest, it’s in the commercial interests of Australia, and it’s in the environmental interests of Australia for that to happen,” he told Sky News.

Labor has yet to commit to a mid-range target, but its climate spokesman Chris Bowen said its 2030 or 2035 aims would be revealed “well before the next election”.


Angry response from China after Australia scraps Belt and Road Initiative

Prime Minister Scott Morrison has scrapped Victoria’s controversial Belt and Road Initiative (BRI) deal with China, calling it “inconsistent with Australia’s foreign policy”.

The decision made late on Wednesday night threatens to inflame already fraught diplomatic tensions between Canberra and Beijing.

Deploying Australia’s powerful new veto powers under legislation passed last year for the first time, the Federal Government ended the deal, warning it was against Australia’s interests.

“I consider these four arrangements to be inconsistent with Australia’s foreign policy or adverse to our foreign relations in line with the relevant test in Australia’s Foreign Relations (State and Territory Arrangements) Act 2020,’’ Foreign Minister Marise Payne said.

“I will continue to consider foreign arrangements notified under the Scheme. I expect the overwhelming majority of them to remain unaffected. I look forward to ongoing collaboration with states, territories, universities and local governments in implementing the Foreign Arrangements Scheme.”

China quickly hit back at Australia over what it called an “unreasonable and provocative move”.

In a statement, a Chinese Embassy spokesman slammed the decision which is expected to plunge the fractured relationship into greater acrimony. “We express our strong displeasure and resolute opposition to the Australian Foreign Minister’s announcement on April 21 to cancel the Memorandum of Understanding on Cooperation within the Framework of the Belt and Road Initiative and the related Framework Agreement between the Chinese side and Government of Victoria,” the spokesman said.

“This is another unreasonable and provocative move taken by the Australian side against China. It further shows that the Australian government has no sincerity in improving China-Australia relations. It is bound to bring further damage to bilateral relations, and will only end up hurting itself.”

China argues the BRI is an initiative for economic co-operation. “The BRI co-operation between China and the Victoria state is conducive to deepening economic and trade relations between the two sides, and will promote economic growth and the wellbeing of the people of Victoria,” the spokesman said.

Victorian Premier Daniel Andrews blindsided the Federal Government when he first signed the Belt and Road deal with the Chinese government in 2018.

It outlined a memorandum of understanding to take part in the $1.5 trillion infrastructure program, which is widely viewed as a global power play by Chinese Communist Party and a national security threat.

The states had previously been offered a deadline of March 10 to inform the Commonwealth of their deals with foreign governments.

“I haven’t seen the benefits of it,” Mr Morrison said earlier this year. “If there are benefits, what are they and what was paid for them? I don’t have the answers to those questions at this point, but the assessment of those arrangements will continue.”

The Victorian Premier, who remains on medical leave had previously defended the deal against allegations it could pose a national security risk.

Labor leader Anthony Albanese has declared his own opposition to the deals pledging Labor would never seek similar agreements.

“Certainly, there shouldn’t be agreements that are inconsistent with Australia’s national interest, or our foreign policy,” Mr Albanese said.

A Victorian government spokeswoman said: “The Foreign Relations Act is entirely a matter for the Commonwealth government.”

“Victoria will continue to work hard to deliver jobs, trade and economic opportunities for our state.”

Relations between China and Australia have been tense since a bitter trade war erupted in 2020.




COVID-19 and the 2021 Border Migration Crisis in Arizona

Three of the four high quality COVID-19 datasets we track for Arizona indicate a new adverse change in trends for the coronavirus pandemic in the state. Arizona's data for positive test results by date of sample collection, new hospital admissions, and ICU bed usage are confirming an increase in the incidence of COVID in the state. The fourth dataset for COVID-19 deaths by recorded date of death certificate does not as yet, but would not be expected to as yet because this data has the greatest lag from a change in the rate of incidence to the confirmation of a change in trend.

We've generated the following animated chart to cycle through each of the charts for these four datasets.

Animated Chart: Arizona COVID-19 Positive Test Results, New Hospital Admissions, ICU Bed Usage, and Deaths, 1 January 2020 - 24 April 2021

Considering the respective lags that apply for each dataset, the likely timing of a significant change in the rate of incidence for SARS-CoV-2 coronavirus infections in the state between 26 March 2021 and 30 March 2021. This period coincides with contemporary news accounts of the Biden administration moving migrants from overloaded Border Patrol migrant facilities in Arizona counties bordering Mexico to facilities and small towns in Maricopa and Pinal Counties.

We think this activity is showing up in Arizona's COVID-19 statistics because these migrants have been exposed to Mexico's higher incidence of COVID-19 infections. While those cases peaked in late January 2021, several weeks after they peaked and began falling in Arizona, the relative difference in infection rates between Arizona's population and the entering migrants is enough to affect the trends for Arizona's COVID-19 data.

On 26 March 2021, Senator Mark Kelly (D-AZ) stated the Biden administration did not have an effective plan for the border. It took another month for President Biden to acknowledge the migration crisis at the U.S. border with Mexico as a crisis.

On 21 April 2021, Arizona Governor Doug Ducey declared a state of emergency and sent Arizona National Guard troops to Arizona's border counties.

Coincidentally, that was the last date we updated our series on the COVID-19 pandemic in Arizona, where our analysis of the trends just before that point of time appeared very early in the morning....

Previously on Political Calculations

Here is our previous coverage of Arizona's experience with the coronavirus pandemic, presented in reverse chronological order.


We've continued following Arizona's experience during the coronavirus pandemic because the state's Department of Health Services makes detailed, high quality time series data available, which makes it easy to apply the back calculation method to identify the timing and events that caused changes in the state's COVID-19 trends. This section links that that resource and many of the others we've found useful throughout the coronavirus pandemic.

Arizona Department of Health Services. COVID-19 Data Dashboard: Vaccine Administration. [Online Database]. Accessed 25 April 2021.

Stephen A. Lauer, Kyra H. Grantz, Qifang Bi, Forrest K. Jones, Qulu Zheng, Hannah R. Meredith, Andrew S. Azman, Nicholas G. Reich, Justin Lessler. The Incubation Period of Coronavirus Disease 2019 (COVID-19) From Publicly Reported Confirmed Cases: Estimation and Application. Annals of Internal Medicine, 5 May 2020.

U.S. Centers for Disease Control and Prevention. COVID-19 Pandemic Planning Scenarios. [PDF Document]. Updated 10 September 2020.

More or Less: Behind the Stats. Ethnic minority deaths, climate change and lockdown. Interview with Kit Yates discussing back calculation. BBC Radio 4. [Podcast: 8:18 to 14:07]. 29 April 2020.