Retirement insights from a Colorado PERA perspective

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A digest of timely information and insight about finance, investing, and retirement.



<a href="https://hbr.org/2018/03/americans-havent-saved-enough-for-retirement-what-are-we-going-to-do-about-it">Americans haven’t saved enough for retirement. What are we going to do about it?</a>&nbsp;|&nbsp;<a href="https://hbr.org">Harvard Business Review</a> Ultimately, the shift from defined benefit pension plans to employee-directed defined contribution 401(k)s <a href="http://crr.bc.edu/wp-content/uploads/2015/06/wp_2015-17.pdf">is the major driver of the impending retirement crisis</a>. Beginning in the 1980s, this move helped companies reduce their retirement liabilities and better meet their quarterly financial targets, but put an unmanageable burden on employees. For 401(k)s to be effective, for example, contributions must be made consistently throughout a worker’s career. In practice, people tend to make contributions sporadically. They also struggle in choosing contribution levels and investment options, and avoiding the temptation of using their savings for other needs.



<a href="https://content.copera.org/retirement-roundup-what-can-be-done-about-the-impending-retirement-crisis/">Ohio lawmakers kill bill to cut PERS benefits</a> |<a href="http://www.dispatch.com">The Columbus Dispatch </a>Republican House leaders shut down hearings on legislation to reduce benefits for Ohio’s largest public retirement system after running into fierce opposition from retirees. The measure would implement recommendations by the Ohio Public Employees Retirement System – or OPERS – aimed to shore up the $90 billion fund. After a handful of hearings, the bill did not have enough votes to pass. It was opposed by many Republican and Democratic lawmakers, and even the state representative sponsoring the bill was skeptical about the plan.



<a href="https://www.marketwatch.com/story/why-early-retirement-can-be-a-killer-2018-03-19">Why early retirement can be a killer</a> |<a href="https://www.marketwatch.com">MarketWatch</a>Think twice – nay, thrice – before claiming your Social Security benefits at age 62. Your life might depend on your decision. Literally. That’s because there’s a marked increase in mortality among men who retire at 62 and begin receiving Social Security, according to a fascinating new study that recently was distributed by the National Bureau of Economic Research. Its authors are two economics professors: Maria Fitzpatrick of Cornell University and Timothy Moore of the University of Melbourne in Australia. The increase in the death rate is quite large, furthermore, particularly among males who retire and claim Social Security at 62: By 20 percent, according to the study. Among females, in contrast, the data are inconclusive.



<a href="https://www.nytimes.com/2018/03/30/health/unretirement-work-seniors.html">Many Americans try retirement, then change their minds</a> |<a href="https://www.nytimes.com">The New York Times</a> Sue Ellen King had circled her retirement date on the calendar: March 8, 2015. She had worked as a critical care nurse and nursing educator at University of Florida Health (UF Health) in Jacksonville, Fla., for 38 years; co-workers joked that she was there when the hospital’s foundation was laid, which happened to be true. So the send-offs went on for days — parties in the units where she had worked, a dinner in her honor, gifts including a framed photo signed by colleagues. Ms. King felt ready. She’d turned 66, her full Social Security retirement age. She’d invested fully in the hospital’s 401(k) plan and consulted with a financial adviser. She and her husband, who had already retired, had paid off the mortgage on their three-bedroom ranch. They took a week’s trip to Hilton Head, S.C., to celebrate their impending freedom. But her retirement lasted just three months. “I’d done all the preparation, except to really think about what life was going to be like,” Ms. King said. Days spent organizing recipes and photos, and lunching with friends, proved less engaging than expected.



<a href="https://www.ai-cio.com/news/minnesota-senate-unanimously-approves-pension-bill/">Minnesota Senate unanimously approves pension bill</a> |<a href="https://www.ai-cio.com">Chief Investment Officer</a>The Minnesota State Senate has unanimously approved a pension overhaul bill that proposes mandatory contribution increases, reduced cost-of-living adjustments, and a lower investment rate of return for the state’s public retirement plans. Backers of the reform say the proposed bill would save Minnesota $6.1 billion over a 30-year period, $3.4 billion of which will be in immediate savings. They also say that if enacted, the state’s public pension plans’ funded status will be between 85 percent and 95 percent by 2048 from approximately 77.8 percent in 2017. “This is the largest pension reform bill in Minnesota’s history,” said the bill’s author, Sen. Julie Rosen (R), in a statement, adding that it “took years of work and negotiations.”



<a href="https://blogs.wsj.com/economics/2018/04/03/why-women-should-keep-working-after-their-husbands-retire/">Why women should keep working after their husbands retire</a> |<a href="https://blogs.wsj.com/">The Wall Street Journal</a>American women should keep working after their husbands retire if they want to catch up in terms of Social Security benefits, based on new research. Married couples often choose to stop working at the same time, taking advantage of the opportunity to travel or otherwise spend time together. But most married women are younger than their husbands, and some have delayed or interrupted careers due to child-rearing. Waiting longer to retire would bring them disproportionate gains under the formula for calculating Social Security retirement benefits, economist Nicole Maestas said in a recent paper. “If you have had a period out of the labor force, or a period of part-time work, or a period when you were earning much less than you’re earning now….you have an opportunity to replace those zeros with positive numbers that are high,” said Ms. Maestas, an associate professor of health care policy at Harvard Medical School. “I’m not sure people are fully aware of all of that.”

Retirement Roundup: What to do about the ‘impending retirement crisis’

A digest of timely information and insight about finance, investing, and retirement.



<a href="https://content.copera.org/retirement-roundup-social-security-retirement-age-going-up/" target="_blank" rel="noreferrer noopener">The Social Security Retirement Age Increases in 2018</a> |&nbsp;<a href="https://content.copera.org/retirement-roundup-the-confusion-surrounding-retirement-planning/" target="_blank" rel="noreferrer noopener">U.S. News &amp; World Report</a>Most Baby Boomers are eligible to claim their full Social Security benefit at age 66. However, Americans who will turn 62 in 2018 need to delay claiming Social Security for an additional four months in order to claim their full benefit.



<a href="https://www.marketwatch.com/story/social-security-is-the-wrong-way-to-finance-student-loan-debt-and-parental-leave-2018-02-20" target="_blank" rel="noreferrer noopener">Borrowing from Social Security is the wrong way to finance student debt and parental leave</a>&nbsp;|&nbsp; <a href="https://www.marketwatch.com" target="_blank" rel="noreferrer noopener">MarketWatch </a>Recently two proposals have emerged that would essentially allow individuals to tap Social Security today in exchange for lower benefits in the future. The first was Congressman Tom Garrett’s (R-Va.) <a href="https://www.ssa.gov/oact/solvency/TGarrett_20180131.pdf" target="_blank" rel="noreferrer noopener">Student Security Act of 2017</a>, which would allow young people to pay off a portion of their student loans today in exchange for a reduction in their future Social Security benefits. The second was a <a href="https://www.wsj.com/articles/a-simple-plan-for-parental-leave-1516836442" target="_blank" rel="noreferrer noopener">Wall Street Journal op-ed</a> by Kristin Shapiro and Andrew Biggs that would use the Social Security Disability program’s formula to fund 12 weeks of paid parental leave in exchange for retiring about six weeks later.



<a href="https://www.plansponsor.com/planning-retire-later-doesnt-reflect-reality/" target="_blank" rel="noreferrer noopener">Planning to Retire Later Doesn’t Reflect Reality</a> |<a href="https://www.plansponsor.com" target="_blank" rel="noreferrer noopener">PLANSPONSOR</a> Studies show that many employees expect to retire later as part of their plan to have more income in retirement. However, a <a href="https://www.copera.org/retirement-roundup-social-security-retirement-age-going-up" target="_blank" rel="noreferrer noopener" class="broken_link">study from Prudential</a> finds 51 percent of retirees retired earlier than planned. Among those, only 23 percent retired earlier than planned because they either had enough money to retire, wanted to retire, or were tired of working. Forty-six percent of those who retired earlier than expected did so due to health problems, 30 percent were laid off from their jobs or offered an early retirement incentive package, and 11 percent left work to take care of a loved one.



<a href="https://www.marketwatch.com/story/what-now-how-to-make-sense-of-the-markets-plunge-2018-02-06" target="_blank" rel="noreferrer noopener">What now? How to make sense of the stock market’s wild ride</a> |<a href="https://www.marketwatch.com" target="_blank" rel="noreferrer noopener">MarketWatch</a>When markets go crazy, financial writers feel compelled to dust off the keyboard and cook up profound insights. But, with the bar set a little lower, here are 13 modest observations following the 4.1 percent plunge by the S&amp;P 500 <a href="https://www.marketwatch.com/story/charting-consecutive-9-to-1-down-days-sp-500-violates-major-support-2018-02-06-131031122" target="_blank" rel="noreferrer noopener">early in February</a>.



<a href="https://www.wsj.com/articles/why-so-many-men-die-at-62-1518404880?shareToken=ste023688dd22c401fabbbf63083748c4f&amp;reflink=article_email_share" target="_blank" rel="noreferrer noopener">Why So Many Men Die at 62</a> |<a href="https://www.wsj.com/" target="_blank" rel="noreferrer noopener">The Wall Street Journal</a>If you’re approaching age 62, thoughts about retirement and collecting Social Security may be on your mind. Here’s something else to think about as well. A significant increase in mortality starts at 62, according to a new study. The escalation is much more dramatic for men than for women. And the fatal catalyst, the study’s authors believe, might be the availability of Social Security.



<a href="https://www.copera.org/retirement-roundup-social-security-retirement-age-going-up" target="_blank" rel="noreferrer noopener" class="broken_link">Support eroding in Kentucky House for 401(k)-style public pensions</a>&nbsp;|&nbsp;<a href="https://www.copera.org/retirement-roundup-social-security-retirement-age-going-up" target="_blank" rel="noreferrer noopener" class="broken_link">Lexington Herald-Leader</a> Sentiment appears to be waning in the Kentucky House to switch public pension systems to 401(k)-style accounts as Gov. Matt Bevin proposed last October. House Education Chairman John “Bam” Carney, R-Campbellsville, said Monday he is “leaning against” moving public employees from a defined-benefits system to a defined-contribution system. A defined pension plan is one in which an employer offers a specified pension payment on retirement predetermined by a formula based on the employee’s earnings history, tenure and age instead of depending directly on a person’s investment returns. A defined contribution plan depends on individual investments like 401(k) programs.

Retirement Roundup: Social Security retirement age going up

A digest of timely information and insight about finance, investing, and retirement.



<a href="https://www.wsj.com/articles/where-should-you-live-in-retirement-1510542841" target="_blank" rel="noreferrer noopener">Where Should You Live in Retirement?</a> |<a href="https://www.wsj.com" target="_blank" rel="noreferrer noopener">The Wall Street Journal</a>It’s one of the most basic questions people ask themselves when they start planning for retirement: Where am I going to live? It’s also one of the most crucial questions, and one that, surprisingly, many people don’t give a lot of thought to. Sure, they ask themselves some cursory questions—especially about the weather and affordability. But they rarely delve very deeply, even though making the right choice can offer a greater chance of having a more fulfilling life.



<a href="https://www.cnbc.com/2017/11/13/senate-tax-tweak-would-curb-pretax-401k-catch-up-contributions.html" target="_blank" rel="noreferrer noopener">Potential Senate tax tweak would curb pretax 401(k) catch-up contributions</a> |&nbsp;<a href="https://www.cnbc.com" target="_blank" rel="noreferrer noopener">CNBC</a>Workers over age 50 would no longer be able to make catch-up contributions on a pretax basis to their retirement plans under a new amendment to the GOP&#8217;s Senate version of the tax bill. This amendment would permit workers over age 50 to contribute up to an additional $9,000 each year to their retirement plans, but it would require that these contributions be made to Roth accounts. Those are accounts where taxes are paid up front. Currently, employees over age 50 can contribute up to $6,000 in additional savings each year to their 401(k) plan and do so on a pretax basis. That&#8217;s on top of the current annual $18,000 limit.



<a href="https://www.plansponsor.com/debt-retirement-affects-confidence/" target="_blank" rel="noreferrer noopener">Debt in Retirement Affects Confidence</a> |<a href="https://www.plansponsor.com/" target="_blank" rel="noreferrer noopener">PLANSPONSOR</a> Americans think it is bad thing for those in retirement to be carrying debt, the LIMRA Secure Retirement Institute found in a survey. However, data from the New York Fed Consumer Credit Panel indicates that those between the ages of 65 and 80 increased their debt load by 40% between 2003 and 2015. The LIMRA Secure Retirement Institute found that 51% of retirees with debt are confident they will be able to live the lifestyle they want, but for retirees without debt, that soars to 70%. Sixty-six percent of Americans view a mortgage held during one’s working years as “good” debt, but only 40% think this is true for those in retirement. Two-thirds (66%) of Americans do not think it is a good idea for people to carry mortgage debt into retirement.



<a href="https://www.copera.org/retirement-roundup-where-you-retire-matters" target="_blank" rel="noreferrer noopener" class="broken_link">Kentucky Governor Seeks Redo of Teacher Pension Analysis</a> |<a href="https://www.copera.org/retirement-roundup-where-you-retire-matters" target="_blank" rel="noreferrer noopener" class="broken_link">U.S. News &amp; World Report</a> Gov. Matt Bevin&#8217;s efforts to overhaul Kentucky&#8217;s ailing pension systems took another twist Tuesday when his administration asked consultants to redo their analysis of his proposed changes to retirement benefits for public school teachers. The request comes days after consultants forecast Bevin&#8217;s pension bill would cost Kentucky taxpayers an extra $4.4 billion over 20 years to fund teacher pensions. That projection assumes more teachers would retire early and the state would earn less on investments. Bevin&#8217;s administration signaled Tuesday it doesn&#8217;t like the assumptions used by the consultants in their analysis of how the governor&#8217;s proposal would impact the Teachers&#8217; Retirement System. The redo request comes as the Republican governor considers convening a special legislative session in Frankfort to deal with one of the country&#8217;s worst-funded public pension systems.



<a href="http://www.governing.com/topics/politics/gov-election-2017-new-york-pensions-forfeiture.html" target="_blank" rel="noreferrer noopener">Pension? Not for Corrupt Lawmakers Anymore in New York</a> |<a href="http://www.governing.com" target="_blank" rel="noreferrer noopener">Governing</a>Starting next year, long-time lawmakers convicted of corruption in New York can no longer count on their pension. On Tuesday, voters overwhelmingly approved a ballot measure that gives judges the right to trim or revoke the pensions of any public servant convicted of a job-related crime. The measure was largely driven by outrage over the corruption scandal that forced the resignation of New York Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos in 2015. Both long-time lawmakers put in for their substantial pensions just days after their convictions. (Both of their convictions were later overturned on a technicality.)



<a href="https://www.marketwatch.com/story/should-we-allow-mandatory-retirement-2017-11-14" target="_blank" rel="noreferrer noopener">Should we allow mandatory retirement?</a>&nbsp;|&nbsp;<a href="https://www.marketwatch.com" target="_blank" rel="noreferrer noopener">MarketWatch</a> Will employees be as effective at their jobs at age 75 as they were at age 55? An employer generally cannot require an employee to retire in most professions, even at a respectable age such as 68; and mandating a retirement age as a condition of employment would be regarded as engaging in age discrimination. How will employers deal with what is sure to be an aging (and more expensive) workforce as life expectancies increase?

Retirement Roundup: Where you retire matters

A digest of timely information and insight about finance, investing, and retirement.



<a href="http://time.com/money/4818155/retirement-planning-mistakes-mental-sabotage/" target="_blank" rel="noreferrer noopener">4 ways you might be sabotaging your own retirement plan</a>&nbsp;|&nbsp;<a href="http://www.time.com/money" target="_blank" rel="noreferrer noopener">Time-Money </a>Successfully preparing for retirement is hard enough, given today’s rapidly evolving economy. But several recent retirement surveys suggest that many of us are also making retirement planning more difficult through self-defeating behavior.



<a href="https://www.nytimes.com/2017/06/30/your-money/plan-on-growing-old-then-the-medicaid-debate-affects-you.html" target="_blank" rel="noreferrer noopener">Plan on growing old? Then the Medicaid debate affects you</a>&nbsp;|&nbsp;<a href="http://www.nytimes.com" target="_blank" rel="noreferrer noopener">The New York Times </a>A majority of people who are lucky enough to grow old cannot and do not pay for themselves in old age. One in three people who reach age 65 end up in a nursing home at some point. According to the <a href="http://www.kff.org/infographic/medicaids-role-in-nursing-home-care/" target="_blank" rel="noreferrer noopener">Kaiser Family Foundation</a>, among the people living in a nursing home today, 62 percent cannot pay the bill on their own. And when that happens, <a href="https://www.nytimes.com/2017/06/23/health/medicaid-basic-facts.html" target="_blank" rel="noreferrer noopener">Medicaid</a> pays. The very Medicaid program that stands to have hundreds of billions of dollars less to spend if anything like the health care bills on the table in Washington come to pass.



<a href="http://squaredawayblog.bc.edu/squared-away/iras-fall-short-of-original-goal/" target="_blank" rel="noreferrer noopener">IRAs fall short of original goal</a>&nbsp;|&nbsp;<a href="http://squaredawayblog.bc.edu/" target="_blank" rel="noreferrer noopener">Squared Away Blog </a>Individual Retirement Accounts, or IRAs hold nearly 8 trillion dollars, or nearly half of all the value held in the U.S. retirement systems, which includes pension funds and 401(k)s. IRAs were created to offer individuals without retirement plans at work the opportunity to save for retirement through tax-deferred accounts. But IRAs “have drifted very far from their original intent” of helping those who need them most, research for the Center for Retirement Research conclude in a <a href="http://crr.bc.edu/briefs/who-contributes-to-individual-retirement-accounts/" target="_blank" rel="noreferrer noopener">new study</a>.



<a href="http://www.marketwatch.com/story/this-is-the-most-helpful-thing-you-can-do-for-your-family-before-you-die-2017-06-26" target="_blank" rel="noreferrer noopener">This is the most helpful thing you can do for your family before you die</a>&nbsp;|&nbsp;<a href="http://www.marketwatch.com" target="_blank" rel="noreferrer noopener">Marketwatch </a>One of the most necessary tasks a person can do in his or her life is getting every personal record in a designated place. Bank and credit card account information, social media emails and passwords, doctor and lawyer contact information, former addresses and employment – might seem daunting, but it can help loved ones efficiently manage their duties, reach out to necessary people and save time in the midst of personal turmoil. And it can even make you more financially fit.



<a href="https://www.wsj.com/articles/ill-funded-police-pensions-put-cities-in-a-bind-1499180342" target="_blank" rel="noreferrer noopener">Ill-funded police pensions put cities in a bind</a>&nbsp;|&nbsp;<a href="http://www.wsj.com" target="_blank" rel="noreferrer noopener">The Wall Street Journal </a>Police pensions are among the worst funded in the nation. Retirement systems for police and firefighters have just a median 71 cents for every dollar needed to cover future liabilities, according to a Wall Street Journal analysis of cities of 30,000 or more. The combined shortfall in the plans, which are the responsibility of municipal governments, is more than $80 billion, nearly equal to New York City’s annual budget. And yet any attempt to bring police pensions into line with today’s municipal budgets and stock-market performance runs into the reality that many officers won’t stand for it – and they often have the public behind them.



<a href="http://www.marketwatch.com/story/where-did-baby-boomers-go-wrong-this-generation-isnt-financially-prepared-for-retirement-2017-07-05" target="_blank" rel="noreferrer noopener">Where did baby boomers go wrong?</a>&nbsp;|&nbsp;<a href="http://www.marketwatch.com" target="_blank" rel="noreferrer noopener">Marketwatch </a>Retirement is right around the corner for many baby boomers – if they haven’t already entered it – yet many are unprepared. Those born between 1946 and 1964 expect they’ll need $658,000 in their defined contribution plans by the time they retire, but the average in those employer-sponsored plans is $263,000, according to a <a href="https://www.leggmason.com/content/dam/legg-mason/documents/en/corporate-press-releases/market-perspective/2017/lm-gis-retirement-07-17.pdf" target="_blank" rel="noreferrer noopener">survey</a> of 900 investors by financial services firm <a href="https://www.leggmason.com/en-us/about/newsroom.html" target="_blank" rel="noreferrer noopener">Legg Mason</a>. Older boomers, who are 65 to 74, have an average of $300,000.



Americans across the country, and all age groups, are <a href="http://www.marketwatch.com/story/the-amount-of-americans-not-saving-for-retirement-is-even-worse-than-you-thought-2017-02-21" target="_blank" rel="noreferrer noopener">drastically under-saved for retirement</a>. Only a third of Americans who have access to a 401(k) plan contribute to it, and previous <a href="http://www.marketwatch.com/story/the-typical-american-couple-has-only-5000-saved-for-retirement-2016-04-28" target="_blank" rel="noreferrer noopener">research</a> suggests the typical middle-aged American couple only has $5,000 saved for the future. There are a multitude of reasons people may not have enough for retirement. Still, not saving enough was the biggest regret among older Americans, according to a <a href="http://www.bankrate.com/finance/consumer-index/financial-security-charts-0516.aspx" target="_blank" rel="noreferrer noopener">survey</a> of 1,000 participants by personal finance site Bankrate.com.

Tag Archives:

Retirement Roundup: What to do about the ‘impending retirement crisis’

Retirement Roundup: Social Security retirement age going up

Retirement Roundup: Where you retire matters

Retirement Roundup: Are You Sabotaging Your Own Retirement?

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