
<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.


<h4 class="wp-block-heading"><a href="https://thehill.com/homenews/5013493-social-security-bill-senate/" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>Social Security Reform Bill Awaits Senate Vote Amid Uncertainty | The Hill</strong></a></h4>



<p>The Social Security Fairness Act, a federal bill that would repeal Social Security’s Windfall Elimination Provision and Government Pension Offset, passed the U.S. House in November. The bill is now awaiting action in the Senate, where its fate is increasingly uncertain with just days left for lawmakers to pass legislation before a new Congress begins.</p>



<h4 class="wp-block-heading"><a href="https://www.investopedia.com/lost-track-of-your-old-401-k-accounts-a-new-service-could-help-recover-the-money-8749171" target="_blank" rel="noreferrer noopener"><strong>Lost Track Of Your Old 401(k) Accounts? A New Service Could Help Recover The Money | Investopedia</strong></a></h4>



<p>The U.S. Department of Labor is getting ready to launch a database to help workers find old retirement accounts. The so-called retirement savings lost and found aims to make sure workers can find and access their 401(k) savings when they switch jobs rather than leaving that money behind. The database should be up and running by the end of the year.</p>



<h4 class="wp-block-heading"><a href="https://www.fastcompany.com/91236800/retirement-saving-spending-psychology" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>Retirement Saving and Spending Can Be Complicated. Here&#8217;s What Psychology Says | Fast Company</strong></a></h4>



<p>When making the transition from regular, full-time work into retirement, many people find themselves struggling to move from a saving mindset to a spending mindset. While every person’s situation is different, principles of psychology can help explain why that transition can be so difficult.</p>



<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/personal-finance/ways-to-maximize-your-end-of-year-philanthropy" target="_blank" rel="noreferrer noopener"><strong>Five Ways to Maximize Your End-of-Year Philanthropy | Kiplinger</strong></a></h4>



<p>The end of the year is a popular time to give money to various causes. If you’re thinking of giving this holiday season, here are some things to keep in mind to ensure your donation makes an impact.</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: WEP/GPO Bill’s Fate Uncertain in Final Days of Congress


<p>The new year is mere weeks away. To make sure taxpayers are informed and prepared, the IRS announced inflation adjustments for many tax provisions in 2025, including marginal tax brackets and retirement account contributions.</p>



<h4 class="wp-block-heading"><strong>Retirement plan contribution limits</strong></h4>



<p>The IRS announced higher contribution limits for 401(k), 403(b) and 457 plans next year.</p>



<p>The maximum amount a worker can contribute to those plans is $23,500 in tax year 2025, an increase of $500. The catch-up contribution limit for most plan participants age 50 and older remains unchanged at $7,500.</p>



<p>Beginning in 2025, some older workers can make additional catch-up contributions. As part of the SECURE 2.0 Act, plan participants who are between the ages of 60 and 63 can make catch-up contributions totaling up to $11,250 in tax year 2025.</p>



<p><a href="https://www.copera.org/retirees/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">Learn more about PERAPlus 401(k)/457 Plans</a></p>



<h4 class="wp-block-heading"><strong>HSA/FSA contribution limits</strong></h4>



<p>The amount of money workers can contribute to medical savings accounts also will increase in 2025.</p>



<ul>
<li><strong>HSA:</strong> Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,300, and those with family coverage will be able to save a maximum of $8,550.</li>



<li><strong>FSA:</strong> For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2025 is $3,300. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $660.</li>
</ul>



<h4 class="wp-block-heading"><strong>2025 tax rates</strong></h4>



<p>Below are updated marginal tax rates for single taxpayers and married couples filing jointly. Visit <a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025">the IRS website</a> for more tax tables and additional details.</p>



<p>Note that since these changes are for tax year 2025, they will generally apply to tax returns filed in 2026; <a href="https://www.copera.org/pera-on-the-issues/updated-tax-brackets-contribution-limits-other-changes-for-2024">2024 tax rates</a> will apply to returns filed in 2025.</p>



<ul>
<li><strong>37%</strong> for incomes over $626,350 ($751,600 for married couples filing jointly)</li>



<li><strong>35%</strong> for incomes over $250,525 ($501,050 for married couples filing jointly)</li>



<li><strong>32%</strong> for incomes over $197,300 ($394,600 for married couples filing jointly)</li>



<li><strong>24%</strong> for incomes over $103,350 ($206,700 for married couples filing jointly)</li>



<li><strong>22%</strong> for incomes over $48,475 ($96,950 for married couples filing jointly)</li>



<li><strong>12%</strong> for incomes over $11,925 ($23,850 for married couples filing jointly)</li>



<li><strong>10%</strong> for incomes $11,925 or less ($23,850 or less for married couples filing jointly)</li>
</ul>



<h4 class="wp-block-heading"><strong>Standard deduction</strong></h4>



<p>In addition to updated tax rates, the IRS announced increases to the standard deduction for tax year 2025:</p>



<ul>
<li><strong>Single taxpayers and married couples filing separately</strong>: $15,000 ($400 increase)</li>



<li><strong>Heads of household:</strong> $22,500 ($600 increase)</li>



<li><strong>Married couples filing jointly:</strong> $30,000 ($800 increase)</li>
</ul>



<p></p>



<p>Taxpayers who are 65 or older can take an additional standard deduction, which is also adjusted for inflation. For tax year 2025, that amount is $2,000 for single filers and $1,600 for others.</p>



<p>Visit <a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025" target="_blank" rel="noreferrer noopener">the IRS website</a> for more adjustments to tax provisions in 2025.</p>



<h4 class="wp-block-heading"><strong>PERA benefits and taxes</strong></h4>



<p>Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by&nbsp;<a href="https://www.copera.org/member-login-registration" target="_blank" rel="noreferrer noopener">logging in</a>&nbsp;to their secure member account or completing a paper Form W-4P.</p>



<p>Retirees and benefit recipients can expect to receive their 1099-R tax forms for tax year 2024 in January 2025.</p>



<p>Learn more at&nbsp;<a href="https://www.copera.org/taxes-on-benefits" target="_blank" rel="noreferrer noopener">copera.org/taxes-on-benefits</a>.</p>


Updated Tax Brackets, Contribution Limits and More to Know for 2025


<h4 class="wp-block-heading"><a href="https://www.healthcaredive.com/news/medicare-advantage-final-rates-2025-modest-cut/711927/" target="_blank" rel="noreferrer noopener"><strong>Federal Government Finalizes Modest Cut to 2025 Medicare Advantage Rates | Healthcare Dive</strong></a></h4>



<p>The Centers for Medicare and Medicaid Services (CMS) finalized the rates it will pay to insurers who run Medicare Advantage plans in 2025, and it’s a slight decrease from the current base rate. The federal government insists insurers will still come out ahead under the new rates, but insurance companies say lower rates could force them to cut benefits and raise premiums.</p>



<h4 class="wp-block-heading"><a href="https://www.plansponsor.com/vermont-plans-to-partner-with-colorado-on-state-auto-ira-retirement-plan/" target="_blank" rel="noreferrer noopener"><strong>Vermont Plans to Partner with Colorado on State Auto-IRA Retirement Plan | PLANSPONSOR</strong></a></h4>



<p>Vermont is the latest state to team up with Colorado to administer its new state-run automatic individual retirement account (IRA) program for people who don’t have access to a retirement plan at work. Colorado’s plan, known as SecureSavings, has also helped auto-IRA programs in Maine and Delaware get off the ground.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.cnbc.com/2024/04/15/americans-think-they-need-1point46-million-to-retire-what-experts-say.html" target="_blank" rel="noreferrer noopener">Americans Think They Need Almost $1.5 Million to Retire. Experts Say to Focus on Another Number Instead | CNBC</a></strong></h4>



<p>For workers who rely on&nbsp;defined contribution&nbsp;accounts like 401(k)s for retirement, knowing how much to save can be a challenge. According to a recent survey, people think they’ll need about $1.46 million to retire comfortably. But experts say workers should be more focused on saving for their individual needs and goals rather than any particular dollar amount.</p>



<h4 class="wp-block-heading"><a href="https://www.usatoday.com/story/money/2024/04/03/fewer-americans-writing-a-will/73170465007/" target="_blank" rel="noreferrer noopener"><strong>Writing a Will is Becoming Less Popular. Why Americans are Opting Out | USA Today</strong></a></h4>



<p>At the height of the COVID-19 pandemic, people saw the need to have a will on file, and estate planners saw a spike in people needing their services. Since then, the percentage of Americans adult who say they have a will had been steadily increasing. The most recent survey, conducted at the end of 2023, showed a reversal in that trend and marked the first decrease since 2020.</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: Insurers Warn Medicare Advantage Rate Cut Could Lead to Higher Premiums


<p>Saving money is always a good idea. Whether it’s for a rainy day or for a major purchase, saving now can help provide flexibility and security when big expenses come down the road.</p>



<p>April 8 through April 12 is&nbsp;<a href="https://americasavesweek.org/" target="_blank" rel="noreferrer noopener">America Saves Week</a>, an annual initiative of the Consumer Federation of America, a nonprofit consumer advocacy organization. It promotes the value of saving money and the importance of making a plan to save.</p>



<p>Beyond peace of mind, here are some additional reasons to consider stashing away some more money this year, if you can.</p>



<h4 class="wp-block-heading"><strong>Take advantage of high interest rates</strong></h4>



<p>The Federal Reserve started raising its key interest rate in March 2022 in an effort to fight inflation. Increases continued throughout 2023, and so far this year, the Fed is holding rates steady.</p>



<p>While the Federal Reserve rate mostly pertains to financial institutions, many banks have passed on those higher rates to their customers. That means interest rates on many savings accounts and certificates of deposit (CDs) are higher than they’ve been in years.</p>



<p>Some high-yield accounts, especially those offered by online banks, advertise rates of 5% annual percentage yield (APY) or higher. On a $5,000 account balance, 5% APY can result in $250 in interest earnings over the course of a year. That extra cash from interest could help you reach your goals faster or help you pay for an unexpected expense.</p>



<h4 class="wp-block-heading"><strong>You may be eligible for a tax break</strong></h4>



<p>If you make pre-tax contributions to a retirement plan such as an IRA, 401(k), or 457 plan, you may already be reducing your taxable income. But you may also qualify for an additional tax break for a portion of your contributions, based on your income.</p>



<p>The&nbsp;<a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit" target="_blank" rel="noreferrer noopener">Retirement Savings Contributions Credit</a>, also known as the Saver’s Credit, offers a credit between 10% and 50% of eligible retirement plan contributions (for a maximum credit of $1,000 for single filers or $2,000 for joint filers).</p>



<p>For tax year 2023, the maximum income for a single filer to qualify for the Saver’s Credit is $36,500 ($73,000 for joint filers).</p>



<h4 class="wp-block-heading"><strong>Boost your retirement security</strong></h4>



<p>PERA members are already setting aside money for retirement with every paycheck. Members in the PERA&nbsp;Defined Benefit&nbsp;Plan can count on PERA to provide monthly retirement income for life, but you’ll never regret having more money available in your golden years.</p>



<p>Whether you’re saving in a traditional savings account, an employer-based plan such as a <a href="https://content.copera.org/retirees/peraplus-401-k-457-plans/" target="_blank" rel="noreferrer noopener">PERAPlus 401(k) or 457 Plan</a>, or even a health savings account (HSA) if eligible, additional savings can provide the flexibility to cover expenses that are hard to plan for. That could include costs like health care—one of the biggest (and growing) expenses—in retirement, long-term care, family needs, and housing.</p>



<p>Colorado PERA will be sharing more information and tips for America Saves Week on social media, so be sure to join the conversation on&nbsp;<a href="https://www.facebook.com/ColoradoPERA/" target="_blank" rel="noreferrer noopener" class="broken_link">Facebook</a>&nbsp;and&nbsp;<a href="https://www.copera.org/do-you-have-a-savings-plan-for-2023" target="_blank" rel="noreferrer noopener" class="broken_link">Instagram</a>.</p>


America Saves Week: Three Reasons to Save More This Year


<h2 class="wp-block-heading" style="font-size:28px"><a href="https://content.copera.org/news-you-should-know-lawmakers-reintroduce-federal-auto-ira-bill/" target="_blank" rel="noreferrer noopener"><strong>Federal Automatic IRA Bill Introduced in the House | TheStreet</strong></a></h2>



<p>Lawmakers in Congress have reintroduced a bill that aims to boost retirement savings for the millions of Americans who don’t have access to a retirement plan at work. The Automatic IRA Act of 2024 would create a system for automatically enrolling workers in individual retirement accounts (IRAs) similar to the auto-enrollment plans that several states, including Colorado, have set up in recent years.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://www.cnbc.com/2024/02/09/limiting-retirement-plan-tax-perks-may-help-social-security-experts-say.html" target="_blank" rel="noreferrer noopener"><strong>Limiting Retirement Plan Tax Perks May Help Social Security, Experts Say | CNBC</strong></a></h2>



<p>A new research paper from the Center for Retirement Research at Boston College is making a splash for its controversial proposal for shoring up Social Security’s finances. The paper promotes the idea of eliminating tax incentives for defined contribution plans like 401(k)s. That means workers would pay tax on their retirement plan contributions, and that tax revenue could be put toward improving Social Security’s funding. The paper has received pushback from those who argue workers will be less likely to save for retirement without tax incentives.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://finance.yahoo.com/news/why-the-1960s-can-help-us-understand-our-confusing-economic-mood-163052769.html" target="_blank" rel="noreferrer noopener"><strong>Why the 1960s Can Help Us Understand Our Confusing Economic Mood | Yahoo! Finance</strong></a></h2>



<p>Despite a growing economy, public sentiment remains stubbornly low, baffling some economists and political experts. In some ways, our current economic mood mirrors the 1960s, a decade marked by a booming economy but also social upheaval and, toward the end of the decade, rising inflation.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://www.kiplinger.com/retirement/guide-to-caring-for-your-aging-parents" target="_blank" rel="noreferrer noopener"><strong>Caring for Your Aging Parents: A Seven-Step Guide | Kiplinger</strong></a></h2>



<p>Finding yourself responsible for the care of people who used to care for you can be an overwhelming experience. Here are a few key considerations and tips for tackling them, from finances and logistics to remembering your own needs and capabilities.</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: Lawmakers Reintroduce Federal Auto-IRA Bill


<h4 class="wp-block-heading"><strong><a href="https://www.pewtrusts.org/en/research-and-analysis/articles/2023/12/22/retirement-assets-in-state-automated-savings-programs-hit-1-billion" target="_blank" rel="noreferrer noopener">Retirement Assets in State Automated Savings Programs Hit $1 Billion | The Pew Charitable Trusts</a></strong></h4>



<p>Automated retirement savings programs, such as Colorado SecureSavings, have amassed more than $1 billion in total assets since states started launching the plans just a few years ago. The programs aim to help private-sector workers who don’t have access to a retirement plan at work, and so far have automatically enrolled more than 800,000 workers.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.copera.org/news-you-should-know-states-auto-enroll-retirement-plans-surpass-1-billion" target="_blank" rel="noreferrer noopener" class="broken_link">Medicare Adding New Types of Mental Health Providers on Jan. 1, 2024 | Axios</a></strong></h4>



<p>As of Jan. 1, Medicare covers marriage and family therapists and mental health counselors in addition to the psychologists, psychiatrists and other providers who had previously been covered. It’s the first expansion of Medicare’s coverage for mental health providers since the late 1980s.</p>



<h4 class="wp-block-heading"><strong><a href="https://coloradosun.com/2024/01/09/meals-on-wheels-covid-dollars/" target="_blank" rel="noreferrer noopener">Services For Older Coloradans Are Shrinking as COVID Aid Ends | The Colorado Sun</a></strong></h4>



<p>Local agencies that provide meals, rides, and other services to aging Coloradans are asking policymakers for more money as COVID funds run out and the demand for services grows. Officials say there’s not enough funding to serve everyone in need, and some agencies now have thousands of people on waitlists.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.nextavenue.org/longevity-literacy-is-key-to-retirement-readiness/" target="_blank" rel="noreferrer noopener">Longevity Literacy Is Key to Retirement Readiness | Next Avenue</a></strong></h4>



<p>How well do you know your life expectancy? Experts say longevity risk — the possibility of living longer than expected and running out of money — is one of the biggest risks retirees without access to a lifetime benefit like PERA face, and too many people underestimate how long they’ll live. By boosting their longevity literacy, workers can enter retirement feeling much more confident and prepared, researchers say.</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: States’ Auto-Enroll Retirement Plans Surpass $1 Billion


<h4 class="wp-block-heading"><a href="https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000" target="_blank" rel="noreferrer noopener"><strong>401(k) Limit Increases to $23,000 for 2024, IRA Limit Rises to $7,000 | Internal Revenue Service</strong></a></h4>



<p>The IRS announced new, higher contribution limits for retirement accounts in 2024. The limit for contributing to a 401(k) or 457 plan next year will be $23,000 (up from $22,500 in 2023) and the IRA limit will rise to $7,000 (up from $6,500). The catch-up contribution limit for 401(k)/457 plans remains unchanged at $7,500.</p>



<h4 class="wp-block-heading"><a href="https://coloradosun.com/2023/11/02/jared-polis-school-funding-budget-2024-2025/" target="_blank" rel="noreferrer noopener"><strong>Jared Polis Pushes to Pay Off Colorado&#8217;s School Funding Shortfall | The Colorado Sun</strong></a></h4>



<p>Colorado Gov. Jared Polis released his 2024-2025 budget proposal, and it calls for fully funding K-12 education in the state for the first time since 2009. The budget proposal also calls for increases in teacher pay and additional investments in Colorado’s workforce. The state legislature is ultimately responsible for setting the state’s budget, and that process will take place during next year’s General Assembly.</p>



<h4 class="wp-block-heading"><a href="https://www.marketplace.org/2023/11/07/how-the-u-s-retirement-system-stacks-up-against-the-rest-of-the-world/" target="_blank" rel="noreferrer noopener"><strong>How the U.S. Retirement System Stacks Up Against the Rest of the World | Marketplace</strong></a></h4>



<p>A new ranking of retirement systems around the world puts the United States in the middle of the pack — 22<sup>nd</sup> out of 47 systems. Here’s a look at the factors that went into the rankings and what’s keeping the U.S. from being ranked among the best in the world.</p>



<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/personal-finance/financial-moves-to-make-for-end-of-year" target="_blank" rel="noreferrer noopener"><strong>Five Financial Moves to Make as Year&#8217;s End Approaches | Kiplinger</strong></a></h4>



<p>The end of the year is fast approaching, and it’s a great time to take stock of your finances and any goals you set for the year — and start thinking about next year. Here are a few important items to consider in your year-end review.</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 Updates 401(k)/IRA Contribution Limits for 2024


<h4 class="wp-block-heading"><a href="https://www.planadviser.com/bipartisan-support-shown-federal-ira-re-introduced-bill/" target="_blank" rel="noreferrer noopener"><strong>Bipartisan Support Shown for Federal IRA in Re-Introduced Bill | PLANADVISER</strong></a></h4>



<p>Lawmakers in Congress are renewing efforts to establish a federal individual retirement account (IRA) program for workers who don’t have a retirement plan at work. The program would be similar to the automatic enrollment programs that multiple states, including Colorado, have launched in recent years.</p>



<h4 class="wp-block-heading"><a href="https://content.copera.org/news-you-should-know-federal-auto-ira-bill-has-bipartisan-support/" target="_blank" rel="noreferrer noopener"><strong>Medicare Will Remove Limits on PET Scans Used With New Alzheimer’s Drugs | The Hill</strong></a></h4>



<p>The Centers for Medicare and Medicaid Services (CMS) said it is removing its limit on covering PET scans that can help diagnose patients with Alzheimer’s disease. The decision will make it easier for Medicare recipients to get prescriptions for the newer Alzheimer’s medications that treat amyloid plaques in the brain.</p>



<h4 class="wp-block-heading"><a href="https://www.nextavenue.org/dont-let-yourself-get-smished/" target="_blank" rel="noreferrer noopener"><strong>Don’t Let Yourself Get Smished | Next Avenue</strong></a></h4>



<p>Scammers are constantly changing their tactics to try to fool people, and “smishing” — or phishing via text message — has become increasingly common. Here are some tips for spotting and avoiding scams from friendly-sounding text messages.</p>



<h4 class="wp-block-heading"><a href="https://www.vox.com/the-highlight/23850582/millennials-aging-parents-boomers-seniors-family-care-taker" target="_blank" rel="noreferrer noopener"><strong>Baby Boomers’ Aging Could be a Caregiver Crisis for Millennials | Vox</strong></a></h4>



<p>Many people in the Baby Boomer generation are beginning to reach the age when they start to require more care. That means younger generations are finding themselves in a “sandwich” situation wherein they are simultaneously taking care of children and aging parents. Experts say it’s an important issue to discuss and plan for as parents get older.</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: Federal Auto-IRA Bill Has Bipartisan Support


<h4 class="wp-block-heading"><a href="https://www.nirsonline.org/reports/closingthegap/" target="_blank" rel="noreferrer noopener"><strong>Closing the Gap: The Role of Public Pensions in Reducing Retirement Inequality | National Institute on Retirement Security</strong></a></h4>



<p>Saving enough money for retirement can be a challenge, and research has shown women and minorities are more likely to be behind on reaching their savings goals. New research from the National Institute on Retirement Security finds the steady, reliable income in public pension plans like Colorado PERA helps level the playing field in retirement, with the strongest impacts on Black and Latino retirees.</p>



<h4 class="wp-block-heading"><a href="https://money.com/fed-interest-rate-pause-mortgages-savings/" target="_blank" rel="noreferrer noopener"><strong>What the Fed’s Interest Rate Pause Means for Mortgages, Savings Accounts and More | Money</strong></a></h4>



<p>The Federal Reserve announced that it is holding its key interest rate steady — for now. Officials say another rate increase is possible before the end of the year, but here’s what to expect in the meantime.</p>



<h4 class="wp-block-heading"><a href="https://www.nextavenue.org/elder-fraud-losses-rise/?mod=djem_b_retirement0917" target="_blank" rel="noreferrer noopener"><strong>Investment Fraud Soars | Next Avenue</strong></a></h4>



<p>Investment fraud schemes targeting older Americans have skyrocketed, totaling nearly $1 billion in 2022. Experts say limited knowledge of cryptocurrency and other new types of payments is one factor behind the rise. Here are some of the common types of scams to watch out for.</p>



<h4 class="wp-block-heading"><a href="https://www.investopedia.com/irs-update-roth-catch-up-rules-and-transition-period-7963382" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>What To Know About IRS&#8217; Catch-Up Contribution Guidance | Investopedia</strong></a></h4>



<p>Late last year, Congress passed a package of retirement-related reforms known as SECURE 2.0. That bill included an important change to catch-up contributions to retirement accounts for workers age 50 and older. The IRS has since said it will allow a grace period of several years to allow people to adjust to the new rules.</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 Pensions Help Address Inequality in Retirement


<p>Generation X – the group of Americans born between 1965 and 1980 &#8212; is often referred to as the “Forgotten Generation.” It’s a smaller group than both the Baby Boomers that came before and the Millennial generation that followed.</p>



<p>With the oldest members of Generation X soon approaching retirement, it’s important to look at where they stand financially. New <a href="https://www.nirsonline.org/reports/genx/" target="_blank" rel="noreferrer noopener">research from the National Institute on Retirement Security</a> (NIRS) finds that many members of Gen X are struggling to meet retirement savings targets and risk having a significantly lower standard of living when they stop working.</p>



<h4 class="wp-block-heading"><strong>Access to employer-sponsored retirement plans</strong></h4>



<p>According to the NIRS researchers, the decline in the number of employers offering defined benefit (DB) pension plans is a major factor in Gen X’s retirement readiness. In 1980, more than 80 percent of workers in the private sector had access to a DB plan, according to the U.S. Bureau of Labor Statistics.</p>



<p>Today, few private employers offer pensions to their workers. Most employees only have the option to save for retirement in employer-sponsored defined contribution (DC) plans like 401(k)s or on their own in individual retirement accounts (IRAs). According to NIRS, just 14 percent of Gen Xers were participating in a DB plan as of December 2020.</p>



<p>The potential challenge of relying solely on DC plans is a person’s retirement income depends on how much they contributed over the course of their working years and the investment gains they may have earned over that time.</p>



<p>Since Generation X was the first generation to enter the workforce when DB plans were on the decline, they’re the first to see the effects of that shift on their finances on a large scale.</p>



<h4 class="wp-block-heading"><strong>Generation X’s retirement readiness</strong></h4>


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><a href=""><img decoding="async" loading="lazy" src="" alt="" class="wp-image-5603" width="256" height="169"/></a><figcaption class="wp-element-caption">Image courtesy: National Institute on Retirement Security (click/tap to enlarge)</figcaption></figure></div>


<p>The NIRS researchers found that just over half of Gen Xers participated in an employer-sponsored retirement plan in in 2020. Of those contributing to a private account like a 401(k), the average balance was $129,994. The median account balance, which isn’t skewed by high earners, was $10,000 for individuals and $40,000 for households.</p>



<p>Additionally, 40 percent of Gen Xers have accounts with no balance at all, according to NIRS.</p>



<p>The researchers warn that retirees who don’t have enough savings to live on will have to rely on Social Security, which wasn’t designed as a full income replacement. In 2023, the average Social Security benefit is about $1,700 a month.</p>



<p>It’s not all bad news, however. The youngest Gen Xers are in their early 40s, which are often a person’s prime earning years. That means younger members of the generation still have time to bolster their savings and improve their retirement security.</p>



<h4 class="wp-block-heading"><strong>How PERA combines the best of DB and DC plans</strong></h4>



<p>The State of Colorado created PERA in August 1931 and since then, PERA has grown to include DB and DC offerings covering more than 670,000 current and former public employees.</p>



<p>The PERA Defined Benefit Plan is available to all PERA members and is designed to provide lifetime income in retirement. The <a href="https://peraontheissues.com/pera-by-the-numbers-a-closer-look-at-the-2022-annual-report/" target="_blank" rel="noreferrer noopener">average monthly benefit was $3,238</a> in 2022.</p>



<p>Some members have a choice between the PERA DB Plan and the PERA DC Plan, which features a variety of low-cost investment options for members who want to invest their retirement funds on their own. Members can also annuitize their account balance at retirement to convert it to regular monthly income.</p>



<p>PERA also offers the optional <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus</a> 401(k) to all members, and some PERA employers also offer the PERAPlus 457 Plan. Both are low-cost options for setting aside extra money for retirement, and both have Roth options for saving after-tax dollars.</p>



<p>Together, PERA’s defined benefit and defined contribution plans help ensure that Colorado’s public employees have the income they need in retirement, regardless of which generation they’re a member of.</p>


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