Retirement insights from a Colorado PERA perspective

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It’s no secret that Social Security is facing financial trouble in the near future; the program is expected to deplete its reserves in less than ten years, <a href="https://www.ssa.gov/oact/trsum/" target="_blank" rel="noreferrer noopener" class="broken_link">according to the latest estimates</a>.



There have been many suggestions for improving Social Security’s finances, one of which would involve requiring all public employees to participate in Social Security. Some public-sector pension plans—like Colorado PERA—serve as a replacement for Social Security, so neither workers nor their employers contribute via payroll deductions.



However, such a shift in federal policy could have unintended negative consequences, according to a recently released report from the Coalition to Preserve Retirement Security (CPRS) and benefits consulting firm Segal. (The Colorado PERA Board of Trustees employs Segal as its actuarial consultant.)



In <a href="https://www.segalco.com/consulting-insights/the-impact-on-the-public-sector-of-mandating-social-security/">“The</a><a href="https://www.segalco.com/consulting-insights/the-impact-on-the-public-sector-of-mandating-social-security/" target="_blank" rel="noreferrer noopener"> Hazards of Mandating Social Security on the Public Sector,</a><a href="https://www.segalco.com/consulting-insights/the-impact-on-the-public-sector-of-mandating-social-security/">”</a> the authors argue that mandatory participation could jeopardize existing retirement plans and lead to additional costs for public employees, their employers, and ultimately taxpayers.



<h2 class="wp-block-heading has-dark-blue-river-color has-text-color has-medium-font-size">Background</h2>



Many states have been providing their public employees with retirement benefits longer than Social Security has been around. For example, the Colorado General Assembly created Colorado PERA in 1931, four years before the federal government established Social Security.



It wasn’t until 1950 that Social Security began accepting state and local government workers into the program. Colorado was among the states that stuck with its own plan to provide retirement, disability, and survivor benefits to the majority of its public workforce (some PERA members and members of other public pension plans may contribute to both a pension and Social Security).


<div class="callout-heading">Note: If you’re a PERA member who has earned a Social Security benefit from other employment, you’ll receive benefit payments from both PERA and Social Security in retirement. Learn more on the <a href="https://copera.org/retirees/benefit-basics-for-retirees/pera-and-social-security">PERA and Social Security page</a>.
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According to the CPRS report, more than four million public employees across the country today are not covered by Social Security, and nearly 250,000 of them are in Colorado.



<h2 class="wp-block-heading has-dark-blue-river-color has-text-color has-medium-font-size">The impact of mandatory Social Security</h2>



The potential implications of requiring participation in Social Security can be difficult to predict, since each state or local government and plan is different and could take a different approach.



For states that would opt to preserve existing plans and also join Social Security, there could be significant added costs. Employees and employers both contribute 6.2 percent of payroll through Federal Insurance Contributions Act (FICA) taxes. Adding those contributions to existing payroll deductions for public employee retirement benefits would eat into workers’ paychecks and put financial strain on school districts, state and local governments, and other public employers.



The CPRS report estimates the cost of additional contributions nationwide to be somewhere between $45 billion and $60 billion in the first five years. In Colorado alone, mandatory Social Security could cost more than $2.5 billion, according to the report.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="703" src="https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-1024x703.png" alt="A map showing the estimated cost of requiring participation in Social Security in all 50 states. Colorado is shown in the &quot;greater than $1 billion&quot; category." class="wp-image-65251" srcset="https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-1024x703.png 1024w, https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-300x206.png 300w, https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-768x527.png 768w, https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-1536x1054.png 1536w, https://content.copera.org/wp-content/uploads/2026/06/cprs-segal-ss-cost-map-2048x1406.png 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



There’s also the potential impact on existing retirement plans to consider. Even if existing plans closed to new members to try to offset the added cost of FICA taxes, for example, the plans would still have to pay retirement benefits their members had earned. And without contributions coming in from working members and their employers, those plans would face additional risk and uncertainty.



In addition, public retirement plans are structured to attract and retain qualified public employees and may provide better benefits that Social Security, especially for workers in demanding and dangerous positions. For example, plans that cover first responders often allow members to retire earlier than plans that don’t. Forcing all employees into Social Security could remove this benefit and make it harder to hire and maintain a talented public workforce.



RELATED: <a href="https://www.copera.org/pera-on-the-issues/study-confirms-pera-a-valuable-tool-for-recruiting-retaining-public-workers">Study Confirms PERA a Valuable Tool for Recruiting, Retaining Public Workers</a>



<h2 class="wp-block-heading has-dark-blue-river-color has-text-color has-medium-font-size">Would it help Social Security?</h2>



Requiring all public employees to participate in Social Security isn’t a sure bet when it comes to shoring up the program’s finances. While increasing the number of participants would increase the amount of money coming into the Social Security trust funds, those new members would also add liabilities—earned benefits—over time, leading to additional expenses for Social Security.



Improving the financial sustainability of the Social Security program is an important goal, and one that will likely require a great deal of discussion between legislators, government officials, and other stakeholders.



While requiring public employee participation may be a part of that conversation, it’s important to keep in mind the potential impacts on employees, employers, governments, and taxpayers who could face additional costs, uncertainty, and other risks.

Should Public Employees Be Required to Participate in Social Security?

<a href="https://www.usatoday.com/story/money/2026/05/04/social-security-benefit-cap-proposal/89934088007/" target="_blank" rel="noreferrer noopener">A Proposal Would Cap Social Security at $100,000. Will It Fly? | USA Today</a>



The latest estimates show Social Security is likely to deplete its reserves in less than a decade, which could lead to benefit reductions if Congress doesn’t take action before then. A recent proposal calls for shoring up the system by limiting benefit payments for higher earners. This article examines the pros and cons of that option as well as other proposals for improving Social Security’s funding.



<a href="https://www.cnbc.com/2026/04/30/trump-executive-order-expanding-retirement-account-access.html" target="_blank" rel="noreferrer noopener">Trump Signs Executive Order Expanding Retirement Account Access for Workers | CNBC</a>



An executive order will soon make it easier for private-sector employees to enroll in a retirement plan if they don’t have one at work. The order establishes a new website, which will launch in 2027, that allows workers to compare and enroll in privately-run individual retirement accounts (IRAs). Eligible workers can also receive matching contributions from the federal government.



<a href="https://www.npr.org/2026/05/04/nx-s1-5787940/tool-survey-helps-plan-aging-longevity-retirement" target="_blank" rel="noreferrer noopener">The Oldest Millennials are 45! This Tool Helps Plan for Longevity | NPR</a>



You may be thinking regularly about retirement and making sure your finances are in order, but how well have you prepared for other aspects of aging? A new survey from the MIT AgeLab and John Hancock Insurance, called the Longevity Preparedness Index, goes beyond money to assess readiness on a variety of factors, such as social support, health, and ease of access to your home.



<a href="https://www.moneydigest.com/2165533/retirement-destinations-united-states-ranked-worst-to-best/" target="_blank" rel="noreferrer noopener">2026 Retirement Destinations In The US, Ranked Worst To Best | Money Digest</a>



Cities in Florida and Arizona may be traditionally popular spots for people looking to relocate in retirement, but locations around the country are gaining ground. This list examines some cities with high percentages of retirement-age citizens and the positive and negative factors that may influence a decision to move there. While no cities in Colorado made the list, one city in a neighboring state came in near the bottom while another ranked in first place.



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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: Should Social Security Cap Benefits at $100K?

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What will the Federal Reserve do next? It appears even Fed officials aren’t sure, given their comments at a recent conference. While it’s likely we’ll see additional interest rate cuts in the future, it’s unclear how low they’ll go, as officials have suggested the rate needed to keep inflation in check may be higher than in the pre-pandemic years.



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Retirement benefits have grown in importance to workers, according to a recent survey. That survey found 62% of respondents said retirement plans contributed most to their financial security, up from 56% the year before. Other priorities included health insurance and paid time off.



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.cnbc.com/2024/11/11/credit-card-debt-among-retirees-jumps-significantly.html" target="_blank" rel="noreferrer noopener">Credit Card Debt Among Retirees Jumps | CNBC</a></h2>



New poll data shows just how much retirees’ credit card debt has grown in recent years. According to the Employee Benefit Research Institute, 68% of retirees had outstanding credit card debt in 2024, up from 40% just two years ago. In general, EBRI says retirees and those approaching retirement today are much more likely to have debt—and more of it—than in the past.



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.nextavenue.org/guide-model-for-dementia-caregivers/" target="_blank" rel="noreferrer noopener">GUIDE Model Offers Hope, Support for Dementia Caregivers | Next Avenue</a></h2>



The Centers for Medicare and Medicaid Services is rolling out a major initiative known as Guiding an Improved Dementia Experience (GUIDE). The new framework aims to fill existing gaps in dementia care and support for caregivers—including training and education, financial assistance for caregiver breaks, and better access to around-the-clock virtual care.



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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: Fed Charting Uncertain Course with Interest Rates

How well do you know the PERA benefits that Colorado PERA provides?



Whether you&#8217;re new to PERA, or you&#8217;ve been working for a PERA employer for 20 years, it&#8217;s important to know how a monthly benefit is calculated, benefit options and other basics.



The quiz below takes just a few minutes to complete and includes links to helpful information on PERA&#8217;s website.


[ays_quiz id=&#8217;2&#8242;]



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Resources for learning more about PERA benefits:



<ul>
<li><a href="https://www.copera.org/benefit-basics" target="_blank" rel="noreferrer noopener">PERA benefit basics</a></li>



<li><a href="https://www.copera.org/pera-frequently-asked-questions" target="_blank" rel="noreferrer noopener">Frequently asked questions (FAQs)</a></li>



<li><a href="https://www.copera.org/video-library" target="_blank" rel="noreferrer noopener">Video library</a></li>



<li><a href="https://www.copera.org/webinars" target="_blank" rel="noreferrer noopener">Webinars</a></li>
</ul>

Quiz: Test Your Knowledge of PERA Benefits

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>
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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.”

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Should Public Employees Be Required to Participate in Social Security?

News You Should Know: Should Social Security Cap Benefits at $100K?

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Quiz: Test Your Knowledge of PERA Benefits

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

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