
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


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


<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.plansponsor.com/senate-help-hearing-spotlights-social-security-reforms-early-retirement-savings/" target="_blank" rel="noreferrer noopener"><strong>Senate HELP Hearing Spotlights Social Security Reforms, Early Career Savings  | PLANSPONSOR</strong></a></h2>



<p>The Senate Committee on Health, Education, Labor and Pensions recently held a hearing to discuss the current and future states of American workers’ retirement savings. The hearing covered topics such as Social Security, automatic savings, and long-term care, as well as potential legislative solutions.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.investopedia.com/trump-indicates-that-he-s-looking-into-a-retirement-system-that-s-like-the-11862180" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>Trump Signals Interest in Australia’s Retirement System: Here&#8217;s How The US Is Different | Investopedia</strong></a></h2>



<p>President Trump has expressed admiration for Australia’s retirement savings system and suggested the United States could learn a few things from the land down under. Australia’s retirement system is one of the largest in the world and is notable for its reliance on employer-funded benefits that reduce savings pressure on individual employees.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://apnews.com/article/social-security-trump-administration-retirement-a94ced488f2e052a5d9df39021701195" target="_blank" rel="noreferrer noopener"><strong>Social Security Administration to Cut Office Visits in Half. What It Means for You. | AP News</strong></a></h2>



<p>The Social Security Administration, which has eliminated thousands of staff positions and moved more services online, is aiming to reduce visits to its local field offices next year. The agency set a target of no more than 15 million in-person visits for 2026, which is about a 50% reduction from the more than 31 million who visited field offices this year.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://money.com/economist-predictions-for-retirement/" target="_blank" rel="noreferrer noopener"><strong>What Economists Predict for Retirees Over the Next 10 Years | Money</strong></a></h2>



<p>What do 2026 and the years beyond have in store for retirees’ finances? It’s hard to say with certainty, but economists can offer up some predictions on factors like inflation and interest rates that are likely to have an impact on personal finance in the coming years.</p>



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


News You Should Know: Senate Committee Holds Hearing on Retirement Savings


<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.denver7.com/lifestyle/health/colorado-becomes-first-state-to-cap-prescription-drug-prices-starting-with-enbrel" target="_blank" rel="noreferrer noopener"><strong>Colorado Becomes First State to Cap Prescription Drug Prices | Denver7</strong></a></h2>



<p>After a lengthy process, Colorado’s Prescription Drug Affordability Board has for the first time set a price cap on a prescription medication. The board declared Enbrel, an injectable drug for autoimmune diseases, unaffordable last year before deciding to institute the price cap.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.nbcnews.com/health/health-care/government-shutdown-medicare-medicaid-health-programs-rcna235052" target="_blank" rel="noreferrer noopener"><strong>What Government Shutdown Means for Medicare, Medicaid and Other Health Programs | NBC News</strong></a></h2>



<p>As of publishing time, the partial shutdown affecting the federal government is still in effect as Congress remains stalled in its efforts to reopen government agencies. While essential programs like Medicare and Medicaid are still operating through the shutdown, they’re largely working under contingency plans with limited staff and resources.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.planadviser.com/42-of-americans-on-track-for-retirement-per-vanguard/" target="_blank" rel="noreferrer noopener"><strong>42% of Americans on Track for Retirement, per Vanguard | PLANADVISER</strong></a></h2>



<p>A new survey finds while more American workers have access to retirement plans through their employers, less than half are likely to enter retirement with enough money to support their lifestyles. The growth in access to retirement plans has heavily favored defined contribution plans like 401(k)s, with the percentage of workers who have access to a defined benefit pension plan dropping to 23%.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.investopedia.com/usd2-trillion-left-in-401-k-s-shows-you-can-forget-money-11824199" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>$2 Trillion Left in 401(k)s Shows You Can Forget Money | Investopedia</strong></a></h2>



<p>If you’ve held a variety of jobs in the private sector over the course of your career, you may have left behind some retirement savings without even realizing it. A recent report found there are nearly 32 million employer-sponsored retirement accounts like 401(k)s that are sitting untouched. Those accounts hold more than $2 trillion in total, or an average of $67,000 each.</p>



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


News You Should Know: Colorado Sets First Price Cap on Prescription Drug


<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://coloradosun.com/2025/08/27/colorado-special-session-what-happened/" target="_blank" rel="noreferrer noopener"><strong>What the Colorado Legislature Did During its Special Session to Tackle a $750M Budget Hole | The Colorado Sun</strong></a></h2>



<p>State lawmakers recently concluded a special legislative session aimed at filling another sizeable hole in Colorado’s budget. In addition to some tax changes to address some of the budget shortfall, lawmakers tackled topics such as artificial intelligence and food assistance.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.thinkadvisor.com/2025/08/22/proposed-social-security-style-long-term-care-benefit-gets-high-marks/" target="_blank" rel="noreferrer noopener"><strong>Proposed Social Security-Style Long-Term Care Benefit Gets High Marks | ThinkAdvisor</strong></a></h2>



<p>A bill under consideration in the U.S. Congress would establish a Social Security-style insurance fund to help cover the costs of long-term care. A recent analysis of the proposed legislation found it has the potential to significantly reduce the portion of retiree households that struggle with money.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.nextavenue.org/the-ai-skills-gap-and-why-50-workers-are-uniquely-positione/" target="_blank" rel="noreferrer noopener"><strong>The AI Skills Gap and Why 50+ Workers Are Uniquely Positioned to Bridge It | Next Avenue</strong></a></h2>



<p>Middle-aged workers worried about falling behind as artificial intelligence becomes more common in the workplace could be missing an opportunity to demonstrate their worth, some experts say. They argue older workers’ knowledge and experience—especially their experience with other transformational technology like the internet and email—actually give them an advantage over younger workers when it comes to working with AI because they know what questions to ask.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><strong><a href="https://www.kiplinger.com/retirement/happy-retirement/why-doing-what-you-ought-in-retirement-beats-doing-whatever-you-want">Retirees: Doing What You &#8216;Ought&#8217; Beats Doing What You Want | Kiplinger</a></strong></h2>



<p>Many people look forward to the freedom of retirement, but that freedom can also feel like a let-down after a lifetime of productivity. Here are some tips for homing in on purpose and direction while still enjoying the leisure and flexibility of retirement.</p>



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


News You Should Know: The Results of the Colorado Legislature’s Special Session


<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.aarp.org/money/taxes/what-to-know-new-tax-law-2025.html" target="_blank" rel="noreferrer noopener"><strong>What to Know About the New $6,000 Tax Deduction | AARP</strong></a></h2>



<p>The recently passed tax and spending bill known as the One Big Beautiful Bill Act includes a new tax deduction for older Americans. The deduction—up to $6,000 per eligible taxpayer—applies to taxpayers who are 65 or older with a modified adjusted gross income of less than $175,000 ($250,000 for married couples filing jointly). The deduction takes effect for the 2025 tax year and is set to expire after the 2028 tax year. </p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://coloradosun.com/2025/07/17/colorado-health-insurance-prices-one-big-beautiful-bill/" target="_blank" rel="noreferrer noopener"><strong>Colorado Health Insurers Propose Huge Price Increases for 2026 | The Colorado Sun</strong></a></h2>



<p>Insurance carriers are asking the state to approve significant increases in plan premiums for people who buy health insurance on the individual marketplace. On average, insurers are proposing a 28.4% increase for 2026, but that percentage is even higher in more rural parts of the state. PERA staff are still working with carriers to finalize details for PERACare plans and we expect to have 2026 premium information available by October 1. </p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.axios.com/2025/07/18/trump-signs-stablecoin-bill-into-law-genius" target="_blank" rel="noreferrer noopener"><strong>GENIUS Act: Trump Signs Stablecoin Bill He Championed | Axios</strong></a></h2>



<p>President Donald Trump signed into law a landmark cryptocurrency bill that establishes a regulatory framework for stablecoins, which are a type of digital currency that’s tied to relatively stable assets like the U.S. dollar. Critics have argued the bill doesn’t include enough guardrails or consumer protections, while proponents say the new regulations will pave the way for cheaper, more efficient ways to move money. </p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.investopedia.com/why-gen-z-believes-side-hustles-are-key-to-a-secure-retirement-11741168?hid=a526fec8f4710d579c898e2c1bdd1b7d2a8953bb&amp;did=18511613-20250710&amp;utm_campaign=investopedia-daily_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=071025&amp;lctg=a526fec8f4710d579c898e2c1bdd1b7d2a8953bb&amp;lr_input=3bcb2a6d7fb80db556175b41a2a4ef69629b1975a06f7b74c80b82739c223050&amp;utm_term=midday" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>Why Gen Z Believes Side Hustles Are Key to a Secure Retirement | Investopedia</strong></a></h2>



<p>Research has shown that younger generations are thinking seriously about retirement and taking action to boost their finances. Not only are members of Gen Z saving for retirement earlier than older generations, but many of them are picking up extra work. A recent survey found over half Gen Z workers have a so-called “side hustle” that helps them pay down debt, save for retirement, and meet other money goals.</p>



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


News You Should Know: How the New $6K Deduction for Seniors Works


<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://apnews.com/article/what-is-republican-trump-tax-bill-f65be44e1050431a601320197322551b" target="_blank" rel="noreferrer noopener"><strong>What&#8217;s in the Big Bill That Trump Has Signed into Law | AP News</strong></a></h2>



<p>Congress passed and President Trump signed the large tax and spending bill, known as the One Big Beautiful Bill Act, that President Trump has made a priority. The bill, which is nearly 900 pages long, makes a wide variety of changes to federal law, including extending tax cuts, creating new temporary tax deductions, boosting funding for border security, and reducing the number of people covered by Medicaid and food assistance programs.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.forbes.com/sites/ronshevlin/2025/07/01/the-new-trend-in-personal-finance-revenge-saving/" target="_blank" rel="noreferrer noopener"><strong>The New Trend in Personal Finance: Revenge Saving | Forbes</strong></a></h2>



<p>You may remember the term “revenge spending” from the period following COVID-related lockdowns, which described the surge in spending that occurred as people began to resume regular daily activities. Now, there’s a reversal happening with many people opting for “revenge saving” instead. Experts say unlike traditional saving, which is often focused on long-term goals, revenge saving is more emotionally reactive and a response to economic volatility and uncertainty.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.usatoday.com/story/money/2025/07/05/most-popular-retirement-states-florida-arizona/84459117007/" target="_blank" rel="noreferrer noopener"><strong>Where do Americans Go to Retire? Not Where You Think. | USA Today</strong></a></h2>



<p>While it’s long been known that retirees like to move to warm states like Arizona and Florida, recent analyses have found changing trends as retiree priorities shift. According to one such list, Wyoming is the top destination for retirees, followed by South Carolina and Idaho. Another ranking lists Massachusetts, Florida, and Illinois as top destinations for retirees. Experts say various factors beyond climate influence retiree migration, including proximity to nature, amenities, and cost of living.</p>



<h2 class="wp-block-heading has-medium-font-size h5"><a href="https://www.kiplinger.com/retirement/retirement-planning/the-first-year-of-retirement-rule" target="_blank" rel="noreferrer noopener"><strong>The &#8216;First Year of Retirement&#8217; Rule | Kiplinger</strong></a></h2>



<p>If you’re nearing retirement, you may be thinking about what your transition away from work looks like and daydreaming about the possibilities. But experts say that without careful planning, the first year of retirement can make or break the years that follow. Here’s why the first year is so important, and some tips for making sure you’re set up for success in retirement.</p>



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


News You Should Know: What’s Included in the Federal Spending Bill?


<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.coloradopolitics.com/governor/colorado-budget-signing/article_76cb6ca7-535d-4261-bd04-7d9305c4e5f7.html" target="_blank" rel="noreferrer noopener">Colorado Gov. Polis Signs $44 Billion Budget into Law | Colorado Politics</a></h2>



<p>After months of debate and legislative work, the State of Colorado officially has a budget for the next fiscal year. Gov. Jared Polis signed the $44 billion budget bill into law this week. Lawmakers had to cut more than $1 billion in order to come up with a balanced budget.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.kiplinger.com/retirement/despite-economic-uncertainty-americans-remain-confident-about-retirement" target="_blank" rel="noreferrer noopener">Despite Economic Uncertainty, Americans Remain Confident About Retirement, Survey Shows | Kiplinger</a></h2>



<p>Workers and retirees alike are confident they’ll have enough money in retirement even amid widespread uncertainty about the economy, according to a recent survey. The survey, from the Employee Benefit Research Institute and Greenwald Research, found that 67% of workers and 78% of retirees are confident about retirement. However, survey respondents did express concern about changes at the federal level, particularly around Medicare and Social Security.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.nextavenue.org/possible-tariffs-on-prescription-drugs/" target="_blank" rel="noreferrer noopener">What Older Adults Need to Know About Possible Tariffs on Prescription Drugs | Next Avenue</a></h2>



<p>The federal government has proposed imposing tariffs on imported prescription medications, and that has the potential to affect many older Americans, who tend to take more medications than younger people. While there is still a lot of uncertainty about what the government will do, experts say drug manufacturers could face shortages and raise prices if tariffs do go into effect.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.forbes.com/sites/carolynrosenblatt/2025/04/15/caught-in-the-middle-the-sandwich-generations-financial--fears-about-aging-parents/" target="_blank" rel="noreferrer noopener">Caught In The Middle: The Sandwich Generation’s Financial Fears About Aging Parents | Forbes</a></h2>



<p>Being a member of the sandwich generation—people who find themselves caring for children and aging parents at the same time—means potentially having to pay for a parent’s long-term medical needs while also putting kids through school. Here are some tips for finding resources that might help ease some of the caretaking burden.</p>



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


News You Should Know: Colo. Governor Signs $44 Billion Budget


<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.healthcaredive.com/news/medicare-telehealth-flexibilities-extended-six-months/742721/" target="_blank" rel="noreferrer noopener">Congress Extends Medicare Telehealth Flexibilities for 6 Months | Healthcare Dive</a></h2>



<p>Lawmakers in Congress passed a temporary extension for rules allowing more flexibility in telehealth coverage under traditional Medicare. The pandemic-era rules, which allow more people to receive care at home, now apply through the end of September. PERACare’s Medicare Advantage plans offer virtual doctor visits with no copay.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://knowledge.wharton.upenn.edu/article/how-to-teach-your-child-about-financial-literacy/" target="_blank" rel="noreferrer noopener">How to Teach Your Child About Financial Literacy | Knowledge at Wharton</a></h2>



<p>April is national financial literacy month, and a surprisingly large share of American adults struggle to correctly answer basic questions about personal finance. It can help to start young, and in this article, a co-creator of the “big three” financial literacy test offers tips for teaching children about money.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.kiplinger.com/retirement/happy-retirement/the-rule-of-1-000-hours-in-retirement" target="_blank" rel="noreferrer noopener">The Rule of 1,000 Hours in Retirement | Kiplinger</a></h2>



<p>How much free time will you have in retirement? Not all time is equal, and experts say when you subtract low-effort leisure activities like watching TV or casually socializing, most people only have about 1,000 hours left each year (or just a few hours a day) for hobbies, travel, and other enjoyable activities. How you spend your time in retirement is just as important as how you spend your money, so here are some tips for making good use of those 1,000 hours.</p>



<h2 class="wp-block-heading has-medium-font-size"><a href="https://www.marketwatch.com/story/as-a-72-trillion-great-wealth-transfer-is-set-to-begin-here-are-4-estate-planning-rules-to-follow-19e637be" target="_blank" rel="noreferrer noopener">As a $72 trillion ‘Great Wealth Transfer’ is Set to Begin, Here are 4 Estate-Planning Rules to Follow | MarketWatch</a></h2>



<p>In the coming years, older generations are expected to pass down trillions of dollars to their children and grandchildren in a societal shift known as the “great wealth transfer.” Experts say planning is key to making sure that transfer goes well—and some simple steps now can help your loved ones avoid confusion down the road.</p>



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


News You Should Know: Congress Extends Telehealth Rules for Medicare


<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025" target="_blank" rel="noreferrer noopener">IRS Releases Tax Inflation Adjustments for Tax Year 2025 | Internal Revenue Service</a></h2>



<p>The new year is just two months away, and the Internal Revenue Service has announced some important tax-related updates. For tax year 2025, the IRS is making adjustments to various tax provisions based on inflation, including the standard deduction, marginal tax rates, earned income tax credits, and more.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://qz.com/medicare-2-drug-list-medicaid-1851668732" target="_blank" rel="noreferrer noopener" class="broken_link">Medicare Wants to Make These Generic Drugs Available for Just $2 | Quartz</a></h2>



<p>The Centers for Medicare and Medicaid Services released a list of dozens of prescription medications that may be included in a pilot program to provide low-cost generic versions of drugs. The drugs—which include popular medications such as inhalers, antibiotics, blood thinners, and cholesterol pills—would be available for $2 beginning in 2027.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.uchealth.org/today/new-blood-tests-for-alzheimers-may-allow-for-earlier-detection/" target="_blank" rel="noreferrer noopener">New Blood Tests for Alzheimer’s May Allow for Earlier Detection | UCHealth Today</a></h2>



<p>Multiple companies have been rolling out new blood tests to help screen for Alzheimer’s disease, aiming to someday replace expensive and invasive procedures like spinal taps and imaging scans. Experts at UCHealth say that while the new tests are promising, there’s still more research that needs to be done before they can be made widely available, and the tests are not yet FDA-approved or covered by insurance or Medicare.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.kiplinger.com/retirement/how-to-step-confidently-into-your-life-after-retirement" target="_blank" rel="noreferrer noopener">How to Step Confidently Into Your Life After Retirement | Kiplinger</a></h2>



<p>Retiring is a major life change that goes beyond a change in employment status, and that move often involves a shift in identity. Here are some tips for handling the transition and embracing a new phase of life.</p>



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


News You Should Know: IRS Releases Tax Adjustments for 2025


<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://civicscience.com/retirement-redefined-how-the-pandemic-and-economic-factors-are-shaping-retirement-plans-among-older-americans/" target="_blank" rel="noreferrer noopener">Retirement Redefined: How the Pandemic and Economic Factors Are Shaping Retirement Plans Among Older Americans | CivicScience</a></h2>



<p>More than four years after the start of the COVID-19 pandemic, we’re still seeing some of the effects of the public health crisis and new data attempt to shed some light on how the pandemic affected retirement planning. Survey data from CivicScience found most adults at or near retirement age said they did not leave the workforce during the pandemic, but older workers (65+) were more likely to say they left work and didn’t return. Of those who left the workforce and returned, more than half expect to work past the age of 65.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.investopedia.com/people-want-congress-to-fix-social-security-s-shortfall-8722073" target="_blank" rel="noreferrer noopener" class="broken_link">Most Americans Want Congress To Fix Social Security and Medicare Shortfalls ASAP | Investopedia</a></h2>



<p>In a recent survey, respondents made it clear that shoring up Social Security and Medicare are top priorities for ensuring retirement security. The survey from the Transamerica Institute for Retirement Studies found over 60 percent of people think the government needs to prioritize filling Social Security’s funding shortfall and over 50 percent think Medicare’s funding should be a priority.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.kiplinger.com/investing/farewell-paper-i-bonds-savings-bonds-going-online-only" target="_blank" rel="noreferrer noopener">Farewell Paper I-Bonds: Savings Bonds Are Going Online Only | Kiplinger</a></h2>



<p>The last remaining paper savings bond is about to go all digital. The U.S. Treasury announced taxpayers will no longer be able to buy paper Series I bonds with their tax returns starting January 1, 2025. Electronic versions of I and EE bonds have been available for purchase online through TreasuryDirect for about two decades, and banks stopped selling paper savings bonds in 2012.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.thetravel.com/beautiful-towns-in-colorado-that-are-great-for-retirement/" target="_blank" rel="noreferrer noopener">Beautiful Towns In Colorado That Are Great For Retirement | The Travel</a></h2>



<p>While many people like to stay put in retirement and age at home, many others like to pack up in search of a change in scenery or a better way of life. This list aims to identify the best towns in Colorado for retirees with a focus on crime and cost of living.</p>



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


News You Should Know: How the Pandemic Affected Retirement Planning


<p>When planning for retirement, it’s important to have a good sense of one’s income sources, expenses, and the various risks to one’s finances over the course of retirement, which could last for two or three decades.</p>



<p>Researchers have identified five major financial risks retirees face: Longevity risk (living longer than expected and running out of savings), market risk (ups and downs in the market affecting account balances), health risk (unexpected health care costs), family risk (financially supporting relatives), and policy risk (potential changes to benefits like Social Security).</p>



<p>Recent research from the Center for Retirement Research at Boston College finds many retirees have an inaccurate sense of which risks pose the biggest threats, which could leave them unprepared. In <a href="https://crr.bc.edu/briefs/how-well-do-retirees-assess-the-risks-they-face-in-retirement/" target="_blank" rel="noreferrer noopener">a survey of about 20,000 people over the age of 50</a>, retirees routinely underestimated their life expectancy and health care costs, while overestimating the effects of the stock market on their finances.</p>



<p>Survey respondents ranked market risk as the biggest risk they face, followed by longevity and health. In what the study author calls an “objective” ranking, longevity risk tops the list, followed by health and market risks.</p>



<p>As people increasingly rely on defined contribution plans like 401(k)s and IRAs for retirement savings, having an inaccurate understanding of these risks can have serious implications for a retiree’s finances.</p>



<p>Defined benefit retirement plans like the one offered by Colorado PERA use strategies that address these risks, particularly longevity risk, to provide retirement security throughout a member’s retired years.</p>



<h2 class="wp-block-heading">Longevity risk and PERA</h2>



<p>PERA’s defined benefit plan provides a retirement benefit that a retiree cannot outlive. That means when a member retires, PERA will continue to provide monthly income until the retiree dies, regardless of how long they live.</p>



<p>Defined benefit plans accomplish this by pooling funds and thereby sharing risk. All contributions, interest, investment gains and other dollars are held in a trust fund that is used to make benefit payments for members. Because all retirees are drawing income from the same source, they share longevity and market risk. For example, a retiree who lives longer than expected will draw more income from the fund while a retiree who dies sooner than expected will draw less – essentially balancing each other out.</p>



<p>To fund each member’s retirement, defined benefit plans like PERA only have to plan for the average life expectancy of the group, not each individual’s expected lifespan.</p>



<p>Ensuring the defined benefit trust funds have enough money to pay retirement benefits for decades to come means making sure PERA has an accurate picture of its membership and potential changes in the future. PERA must be able to estimate how long members will live, how much of a benefit they’ll earn, and other factors.</p>



<p>That’s where actuaries come in. These highly skilled mathematicians have the important task of calculating the plan’s liabilities (how much money is owed to benefit recipients) and determining how much money the plan will need on hand to meet those liabilities.</p>



<blockquote class="wp-block-quote">
<p><strong>Read more: </strong><a href="https://peraontheissues.com/explaining-the-role-of-actuaries-in-retirement-plans-like-pera/" target="_blank" rel="noreferrer noopener"><strong>Explaining the Role of Actuaries in Retirement Plans like PERA</strong></a></p>
</blockquote>



<p>Among PERA retirees, the average age at which members retired in 2021 was 59, and the average age of death was 83, so PERA may have to pay a retiree benefits for more than 20 years, on average.</p>



<p>Those numbers won’t always be the same, however. Factors such as life expectancy change over time, so it’s important for plans like PERA to periodically review and adjust. PERA embarks on this process every four years with what is known as an experience study, which compares what actually happened in a given time frame against what PERA projected would happen.</p>



<p>PERA&nbsp;<a href="https://peraontheissues.com/2020-experience-study-preparing-for-a-secure-future/" target="_blank" rel="noreferrer noopener">last conducted an experience study</a>&nbsp;in 2020, and the Board of Trustees adopted several new assumptions as a result. This process will take place again in 2024.</p>



<p>In addition to longevity risk, PERA can help members plan for other types of financial risk, as well. The <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus 401(k) and 457 plans</a> provide low-cost options to set aside extra money for retirement. This can help with large or unexpected expenses, such as health care or rising costs of goods and services.</p>



<p>By pooling assets and regularly monitoring and adjusting as needed, PERA can help alleviate the stress associated with retirees’ biggest financial risk and continue to provide reliable monthly income they can’t outlive.</p>


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