Retirement insights from a Colorado PERA perspective

A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.

<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.cbsnews.com/news/when-will-i-get-my-2025-tax-refund/" target="_blank" rel="noreferrer noopener">Will the Expected IRS Staff Cuts Delay my 2025 Tax Refund? | CBS News</a></h2>



The federal government’s downsizing efforts have extended to the Internal Revenue Service, where thousands of positions are expected to be cut in the middle of the busy tax season. While most taxpayers likely won’t encounter any trouble with their returns, there may be delays for anyone who needs to reach out to the IRS for customer service.



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.forbes.com/sites/dandoonan/2025/03/03/the-unsung-economic-engine-retiree-pension-spending/" target="_blank" rel="noreferrer noopener">The Unsung Economic Engine: Retiree Pension Spending | Forbes</a></h2>



An annual analysis from the National Institute on Retirement Security highlights the significant contributions retirees make to local and national economies. Their pension spending results in $1.5 trillion in economic output and supports 7.1 million jobs nationwide, according to NIRS. On a more local level, PERA <a href="https://www.copera.org/pera-on-the-issues/measuring-the-impact-of-4-5b-in-annual-retirement-benefits-in-colorado" target="_blank" rel="noreferrer noopener">paid $4.55 billion in benefits</a> to more than 114,000 retirees who lived in Colorado 2023, resulting in $7.1 billion in economic output and supporting more than 28,000 jobs.



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://401kspecialistmag.com/401k-millionaire-ranks-grew-27-in-2024-fidelity/" target="_blank" rel="noreferrer noopener">401(k) Millionaire Ranks Up 27% in 2024, Says Fidelity | 401k Specialist</a></h2>



Retirement plan recordkeeper Fidelity says its data show a significant increase in the number of people with over a million dollars saved for retirement last year. The company noted a 27% increase in 401(k) “millionaires” over the course of 2024, most of them members of the Baby Boom generation and Generation X. On average, they’ve been saving for 26 years and contribute 17% of their income to their retirement accounts, according to Fidelity.



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.mcknightsseniorliving.com/news/more-older-adults-living-disability-free-lives-and-thats-extremely-encouraging-researcher-says/" target="_blank" rel="noreferrer noopener">More Older Adults Living Disability-Free Lives, and That’s ‘Extremely Encouraging,’ Researcher Says | McKnight&#8217;s Senior Living</a></h2>



We know people tend to live longer than they did generations ago, and new research sheds some light on the quality of that extended lifespan. A recent analysis finds that the percentage of older Americans who say they’re living without a disability has increased in recent years—reaching 65% in 2017.



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News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.

News You Should Know: Will IRS Staff Reductions Affect Tax Filing Season?

Every month retired public employees across the state receive their benefit payments from Colorado PERA. Retirees then spend their income in their communities, supporting local economies and jobs and providing an important stabilizing economic force.



In 2023, PERA paid $4.56 billion in benefits to 114,432 retirees living in Colorado, resulting in $7.1 billion in total economic output and supporting 28,525 jobs in the state, according to <a href="http://copera.org/pacey-report-2024" target="_blank" rel="noreferrer noopener">a newly released report</a> from Boulder-based Pacey Nehls Economic Consulting. The Economic and Fiscal Impacts report also found PERA retirees paid nearly $382 million in state and local taxes on those benefits, supporting schools, roads, and other vital services.



<h2 class="wp-block-heading">The multiplier effect</h2>



When retirees spend their pension income, it sets off a multiplier effect as businesses then spend money to stock more inventory and hire staff, employees of those businesses spend their own income, and governments collect taxes on all that spending. The result is every dollar in PERA benefits grows as it cascades through the economy.



This cycle of spending illustrates the economic measure of “value-added,” which counts only the additional production of goods and services resulting from PERA distributions rather than total output.



Pacey Nehls estimates a PERA retiree’s economic output multiplier at 1.56, meaning an extra 56 cents are generated in the economy for every dollar a retiree spends. In total, PERA retiree spending resulted in $3.39 billion in added economic value statewide last year.



<h2 class="wp-block-heading">The stabilizing effect</h2>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="496" src="https://content.copera.org/wp-content/uploads/2024/07/pera-distributions-per-capita-1024x496.png" alt="A chart showing annual PERA retirement distributions per capita for various regions in 2009 and 2023. Colorado statewide: $480 per capita in 2009, $780 per capita in 2023. Metro Denver: $412 per capita in 2009, $708 per capita in 2023. Colorado Springs: $491 per capita in 2009, $735 per capita in 2023. Pueblo-Southern Mountains: $1,007 per capita in 2009, $1,555 per capita in 2023. San Luis Valley: $647 per capita in 2009, $1,155 per capita in 2023. Southwest Mountain: $496 per capita in 2009, $775 per capita in 2023. Western: $507 per capita in 2009, $879 per capita in 2023. Mountain: $363 per capita in 2009, $654 per capita in 2023. Northern: $567 per capita in 2009, $809 per capita in 2023. Eastern: $531 per capita in 2009, $996 per capita in 2023." class="wp-image-52009" srcset="https://content.copera.org/wp-content/uploads/2024/07/pera-distributions-per-capita-1024x496.png 1024w, https://content.copera.org/wp-content/uploads/2024/07/pera-distributions-per-capita-300x145.png 300w, https://content.copera.org/wp-content/uploads/2024/07/pera-distributions-per-capita-768x372.png 768w, https://content.copera.org/wp-content/uploads/2024/07/pera-distributions-per-capita.png 1416w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Regional per capita annual PERA retirement distributions in 2009 and 2023</figcaption></figure>



The consistent flow of billions of dollars in PERA retirement benefits into communities across the state every year helps add stability to the state and local economies. This stabilizing effect is especially strong in some of Colorado’s rural areas, where public employees make up a larger portion of county payroll and their retirement benefits are higher per capita.



For example, the Denver metro area has the most overall PERA distributions in Colorado at more than $2.3 billion last year, which equates to $708 per person. Meanwhile, the Pueblo-Southern Mountain region’s $382 million in PERA benefits comes out to $1,555 per person.



The stabilizing effect of PERA benefits was especially helpful <a href="https://www.copera.org/pera-on-the-issues/u-s-pension-benefits-played-important-economic-role-in-first-year-of-pandemic" target="_blank" rel="noreferrer noopener">during the COVID-19 pandemic</a>. When businesses, schools, governments, and other entities shut down or greatly reduced staff due to the health emergency, PERA continued to pay benefits to retirees across the state, providing consistent, reliable money to local economies when other economic activity was lower than usual.



For more information, including detailed breakdowns by region and county, <a href="http://copera.org/pacey-report-2024" target="_blank" rel="noreferrer noopener">download the Economic and Fiscal Impacts report here</a>.

Measuring the Impact of $4.5B+ in Annual Retirement Benefits in Colorado

A new report highlights how spending by public sector retirees across the United States helped support jobs and local economies during the tumultuous first year of the COVID-19 pandemic.



In <a href="https://www.nirsonline.org/reports/pensionomics2023/" target="_blank" rel="noreferrer noopener">Pensionomics 2023</a>, researchers from the National Institute on Retirement Security (NIRS) state public and private pension plans paid out nearly $613 billion in retirement benefits in 2020, resulting in $1.3 trillion in total economic output as retirees turned around and spent those dollars. Retirees also paid taxes on those benefits, paying nearly $158 billion to federal, state and local governments. In total, NIRS estimates retiree spending supported nearly 6.8 million U.S. jobs in 2020.



Pension benefits from state and local plans made up more than half of the pension benefits paid that year, totaling more than $334 billion, according to NIRS. In <a href="https://www.nirsonline.org/wp-content/uploads/2023/01/pensionomics2023_CO.pdf" target="_blank" rel="noreferrer noopener">Colorado alone</a>, public sector retirees received $5.5 billion in pension benefits in 2020, translating to $7.9 billion in total economic output and supporting 45,267 jobs. Those jobs represented 1.5 percent of the state’s total workforce.



<h2 class="wp-block-heading">Colorado PERA’s economic impact</h2>



PERA is the largest retirement plan serving public employees in Colorado with nearly 650,000 members.



More recently, in 2021, PERA paid $4.35 billion in retirement benefits to more than 110,000 Colorado retirees. That resulted in $6.8 billion in total economic output and supported 31,449 jobs statewide, <a href="https://www.copera.org/u-s-pension-benefits-played-important-economic-role-in-first-year-of-pandemic" target="_blank" rel="noreferrer noopener" class="broken_link">according to a report by Pacey Economics</a>. In addition, retirees paid $382.2 million in state and local taxes on those PERA benefits.



<blockquote class="wp-block-quote">
READ MORE: <a href="https://peraontheissues.com/pera-benefits-contribute-billions-of-dollars-to-state-economy-support-thousands-of-jobs/" target="_blank" rel="noreferrer noopener">PERA Benefits Contribute Billions of Dollars to State Economy, Support Thousands of Jobs</a>
</blockquote>



The steady stream of income that defined benefit pensions provide is an important economic driver, providing a measure of stability when it’s needed the most. 



“Every month, PERA pays out hundreds of millions of dollars to retired public employees and their beneficiaries across Colorado, and those dollars are spent in their local communities,” said PERA Executive Director Ron Baker. “Retiree and beneficiary spending is a vital part of Colorado’s economy, and the stabilizing effect of that spending has been evident amid the economic uncertainty we’ve experienced in recent years.”

U.S. Pension Benefits Played Important Economic Role in First Year of Pandemic

Every month, Colorado PERA distributes millions of dollars in retirement benefits to more than 110,000 retirees living in Colorado. Those retirees spend their retirement income in their communities, contributing to the local and regional economies and supporting thousands of jobs.



The economic effects of PERA retiree spending are the focus of a recently released report, <a href="https://www.copera.org/u-s-pension-benefits-played-important-economic-role-in-first-year-of-pandemic" target="_blank" rel="noreferrer noopener" class="broken_link">Colorado PERA’s Economic and Fiscal Impacts</a>, prepared by Boulder-based Pacey Economics.



In 2021, PERA paid $4.35 billion in retirement benefits to more than 110,000 Colorado retirees, resulting in $6.8 billion in total economic output and supporting 31,449 jobs statewide, according to the report. In addition, retirees paid $382.2 million in state and local taxes on those PERA benefits.



<h2 class="wp-block-heading">The multiplier effect</h2>



Every dollar a retiree receives from PERA is a dollar they can spend on goods and services in their community — at the grocery store, restaurants, retail stores and other businesses. That spending sets off a multiplier effect as businesses then spend money to stock more inventory and hire more staff. The result is that original PERA dollar continues to be invested in the local community as businesses and their employees also purchase goods and services.



This cycle of spending illustrates the economic measure of “value-added,” which counts only the additional production of goods and services resulting from PERA distributions rather than total output.



Pacey Economics estimates a PERA retiree’s economic output multiplier at 1.56, meaning an extra 56 cents are generated in the economy for every dollar a retiree spends. In total, PERA retiree spending resulted in $3.16 billion in added economic value statewide last year.



<h2 class="wp-block-heading">PERA benefits as a stabilizing force</h2>



PERA distributions are a source of regular, reliable income for the thousands of Colorado retirees who receive them. That consistent flow of income is especially helpful to local and regional economies during times of uncertainty and downturn.



“Retiree and beneficiary spending is a vital part of Colorado’s economy,” said PERA Executive Director Ron Baker. “The stabilizing effect of that spending has been evident amid the economic uncertainty we’ve experienced in recent years.”



While the Denver metropolitan area has the largest number of benefit recipients, the impact of PERA benefits is especially large in rural areas of Colorado, where there may be lower economic activity. In rural parts of the state, PERA distributions are higher per capita and they make up a larger portion of county payroll.



For example, in Custer County, PERA retirees received more than $7 million in retirement distributions in 2021, representing more than 37 percent of payroll. In Denver County, $383,118,000 in PERA distributions amounted to just over 1 percent of payroll. Statewide, PERA benefits make up 2.9 percent of payroll.



For more information, including detailed breakdowns by region and county, <a href="https://www.copera.org/u-s-pension-benefits-played-important-economic-role-in-first-year-of-pandemic" target="_blank" rel="noreferrer noopener" class="broken_link">download the full report here</a>.

PERA Benefits Contribute Billions of Dollars to State Economy, Support Thousands of Jobs

This is the second in a series of articles for National Retirement Security Month exploring how Colorado PERA provides retirement security to public employees.



<h2 class="wp-block-heading">Stability amid uncertainty</h2>



At a time when many people have struggled to save for retirement on their own, PERA has continued to pay retirement benefits that support retirees and Colorado’s economy.



When the COVID-19 pandemic began in early 2020, businesses shut their doors, stock markets dropped, and many people found themselves facing the loss of income and savings. That economic disruption was especially painful for older Americans who rely on their savings for income in retirement: <a href="https://www.commonwealthfund.org/publications/surveys/2021/sep/impact-covid-19-older-adults">A recent survey by The Commonwealth Fund</a> found that in the United States, 19 percent of adults 65 and older used up all or most of their savings or lost a source of income during the pandemic. That’s a higher percentage than other high-income countries included in the survey.



For public sector employees who participate in a defined benefit pension plan like what PERA offers, benefit payments have offered some financial stability during otherwise uncertain times.



<h2 class="wp-block-heading">The value of reliable income</h2>



Retirees who rely on retirement plans like 401(k)s or their personal savings have to carefully track their withdrawals during retirement to make sure they don’t overspend and deplete their accounts. But in a defined benefit retirement plan, retirees receive a monthly payment that isn’t determined by their account balance, and a retiree cannot outlive their benefit.



While the COVID-19 pandemic and its effects have been felt far and wide, PERA continued to pay monthly benefits to the thousands of retirees in Colorado who rely on them.



In 2020, PERA paid more than $4.2 billion in pension benefits to more than 107,000 retirees living in Colorado, with an average monthly benefit of $3,204. Those benefit payments translate to billions of dollars in spending, supporting local businesses and jobs. In 2019, <a href="https://content.copera.org/pera-benefits-provide-economic-stability-during-uncertain-times/">a report by Boulder-based Pacey Economics</a> calculated that retiree spending in Colorado supported more than 32,000 jobs.



The stabilizing effect of PERA benefits is especially important in Colorado’s rural areas, where retiree income makes up a greater share of area payroll. In 26 Colorado counties (nearly all rural), these distributions represent at least 10 percent of the county’s total payroll.



In addition, PERA had more than $808 million invested in Colorado-based companies, partnerships, and assets as of the end of 2020. Those investments include equity of companies headquartered in Colorado and real estate investments. PERA also employs investment managers with operations and employees in the state.



Together, PERA benefits and investments strengthen Colorado’s economy and help provide stability during periods of uncertainty. And although changes to PERA — including increased contributions and a decreased Annual Increase — have been difficult for everyone, they have resulted in a more resilient plan that is able to continue to pay monthly lifetime benefits while meeting its funding goal.

PERA Benefits Provide Economic Stability During Uncertain Times

As the global economy continues to fluctuate in reaction to the COVID-19 pandemic, PERA members continue to inject over $4 billion into the state and local economies. The economic role PERA retirees play in the areas in which they live is the focus of the recently released <a rel="noreferrer noopener" href="https://content.copera.org/pera-retirees-have-a-big-effect-on-colorados-economy/" target="_blank">Economic and Fiscal Impacts 2020</a> report, prepared by Boulder-based Pacey Economics, Inc.



The Value of a Defined Benefit Plan



In a defined benefit plan, employee and employer contributions go into a trust. Funds in this trust are invested. Any investment returns increase the trust’s overall value. Funds in the trust are used to pay retiree benefits.



Economists at Pacey calculated that PERA employer contributions account for about three percent of the overall budgets of participating employers. Once those contributions arrive at PERA, they get put to work. Over the past three decades, investment returns have been the largest source of additions to the fund (61%), ahead of employer contributions (22%) and employee contributions (17%).



“We feel that this is a much more efficient use of money than a 401k plan or Social Security,” said Jeffrey E. Nehls, an economist at Pacey Economics. “If we were to put the same money in a 401k or Social Security, we wouldn’t have as good of an outcome, as much money for retirees to spend.”



Nehls said that Social Security is a regressive benefit. Middle-class income earners in Social Security recoup a smaller percentage of their total contributions compared to PERA retirees. One contributing factor is the way in which contributions are invested. “Social Security is required to invest in Treasuries,” he said. “So, they don’t earn as much interest on their earnings compared to PERA, making it a much less efficient use of contributions.”



Taking the Guesswork Out of Retirement



Nehls added that a retiree with a defined benefit plan doesn’t need to guess about longevity when making a retirement budget, while a person relying on a defined contribution plan like a 401(k) does. Those in a defined contribution plan must predict how long they might live when determining how much to withdraw each year. Erring on either side has financial consequences. Overestimate your lifespan, and you curtail your spending and leave money on the table. Underestimate, and you find yourself without needed income later in life.



It’s unlikely any person can guess their lifespan in advance, so most people will end up overestimating or underestimating to a certain degree. “But in a defined benefit plan,” Nehls said, “you avoid that problem of having to adjust risk in spending.”



Additionally, 401(k) plans are less efficient because participants often dial down risk, and potential returns, as they near retirement, as well as throughout retirement. Funds in a defined benefit plan can remain more fully invested in investments with higher potential returns.



The PERA Retiree Impact on Colorado’s Economy



The report illustrates the ways in which retirees are an integral part of their local economy. Because 106,059 PERA retirees live in Colorado, the statewide effect is significant. 



Nehls said that if he had to convey this concept with a single image from the report, he would choose this one:



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="415" height="236" src="https://content.copera.org/wp-content/uploads/2020/07/image-1.png" alt="Hand inputs $4.11 billion, which produces $6.66 billion in economic input. $3.15 billion in value is added. There is $1.71 billion in labor income and $360.1 million in state/local taxes. " class="wp-image-44016" srcset="https://content.copera.org/wp-content/uploads/2020/07/image-1.png 415w, https://content.copera.org/wp-content/uploads/2020/07/image-1-300x171.png 300w" sizes="(max-width: 415px) 100vw, 415px" /></figure>



This image details how the income PERA retirees receive ($4.11 billion in 2019) ends up producing $6.66 billion in economic output. That’s because retiree income has, in the language of economics, a high velocity of money. 



Velocity of money is a measure of how many times a dollar gets moved from person to person during a set amount of time. 



Someone who is employed might save some for retirement, save some for a down payment on a home or car, save some for a college fund for a child. Saving money is good for the individual in this instance, but it removes money from actively flowing through the economy. This results in a low velocity of money.



On the other hand, retirees, especially those who receive a steady income, tend to spend a higher percentage of their income as long-term saving is less of a priority. This results in a high velocity of money, which can have powerful downstream effects. Pacey economists calculated that retiree spending in Colorado results in supporting 32,772 jobs.



A Constant Amid Uncertainty



“The other big takeaway,” Nehls added, “is that when there is an economic downturn, like the one we are experiencing now, retiree spending acts as a huge stabilizer. People in a defined benefit plan like PERA have the same paycheck every month. While some people lose some or all of their income, retirees have money to keep the economy going. A defined benefit plan is not volatile, unlike the labor market or stock market.”



This stabilizing effect is especially important in Colorado’s rural areas, where retiree income makes up a greater share of area payroll. In 26 Colorado counties (nearly all rural), these distributions represent at least 10 percent of the county’s total payroll.



PERA retirees play an integral role in their communities. They provide leadership. They continue to do important work, often volunteering their time. The economic benefit they provide is another way in which their communities rely on them. As the introduction to the report states, “the stability and size of PERA’s monthly benefit payments will continue to grow and help Colorado’s economy weather and recover more quickly than if this 89-year investment by Colorado wasn’t continued and secured on behalf of the citizens of the state and for our civil servants who help us all to continue to make our wonderful home of Colorado better.”



<blockquote class="wp-block-quote">
<a href="https://www.copera.org/pera-retirees-have-a-big-effect-on-colorados-economy" target="_blank" rel="noreferrer noopener" class="broken_link">Highlights of the Economic and Fiscal Impact Study of Colorado PERA—State of Colorado</a>
</blockquote>

Tag Archives:

News You Should Know: Will IRS Staff Reductions Affect Tax Filing Season?

Measuring the Impact of $4.5B+ in Annual Retirement Benefits in Colorado

U.S. Pension Benefits Played Important Economic Role in First Year of Pandemic

PERA Benefits Contribute Billions of Dollars to State Economy, Support Thousands of Jobs

PERA Benefits Provide Economic Stability During Uncertain Times

PERA Retirees Have a Big Effect on Colorado’s Economy

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