Month: October 2016

Use an Online Financial Planner? Caveat Emptor (Buyer Beware).

Posted on by planeteria

In an ever more complex financial environment, only around 40 percent of Americans used a financial planner in 2015. While this figure represents a dramatic increase over the last five years (from 28 percent in 2010), it still means that more than half of Americans might not have a clear source for information about personal financial planning. With financial planner fees falling somewhere in the $150 to $300 an hour (or 1 to 2 percent of assets) range, it is easy to understand why many Americans opt out of this expense.

Many Americans are taking a do-it-yourself approach to personal financial planning with access to information readily available online. While the internet is a treasure trove of information on all topics, it does not discriminate between accurate information and misleading information. When seeking financial advice or information in the digital world, it is important for consumers to keep in mind that all channels and sources of information are not created equally. Let’s examine a few do’s and don’ts for finding digital financial planning advice.

Don’t Talk To Internet Strangers

It is a natural inclination to ask individuals for their opinions and perspectives. The average consumer wouldn’t trust a stranger on the street for critical advice, yet the internet is overflowing with forums where you can get advice on anything from fixing your furnace to parenting. The problem with these forums is that it is difficult to verify whether the advice giver is qualified or not.

Do Get Information Directly from the Horse’s Mouth

It is one thing to learn basic financial concepts online; it is another thing altogether to rely on online advice when you’re making a financial decision. Any reputable firm offering a financial product or service will provide multiple avenues for obtaining information ranging from toll-free phone lines to online chats. PERA, Social Security, and investment firms are the hands-down experts when it comes to their own products and services. While a planner or forum participant might be aware of the product in question, no one will have more expertise than the providers of the service or product themselves.

Don’t Rely on Financial Blogs

Starting a blog is simple. Providing accurate and timely insights on finance is not. While blogs are a starting point in the process of learning about personal finance, readers should take the information presented with a grain of salt. Blogs communicate with a broad brush and should not be taken as gospel. The nuances of each individual’s financial situation simply can’t be covered by a blog.

Do Consider Using Financial Apps and Calculators

Checking monthly or quarterly statements is no longer enough in a global financial system and consumer-driven economy designed to facilitate spending at any second of the day. Mobile apps such as Mint, Acorns, Robinhood, and proprietary banking apps deliver constant access to personal financial information and management. Consumers are using real time feedback to drive improved decision making and outcomes on everything from fitness to driving habits. Personal finance is no different. Knowing where you stand is an important step in planning for where you want to go.

Be Thoughtful

Modern technology is revolutionizing personal financial planning. Consumer access to a wide array of mostly free tools has simplified a complex system. Yet, it’s important to remember that not all tools are up to the task. Individuals managing their own financial wellbeing via digital means should take a moment to consider the value of the tools and the expertise of advice givers they use. In the real world questions and due diligence are common sense. In a digital world where a savvy user can appear at the top of a search list, information seekers must stop and consider where the results fall within their do or don’t list.

It comes down to this simple premise: no one manages your money for free and the buyer should beware.

PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees.
We encourage you to comment with your thoughts and feedback.

Retirement Roundup: Health Care Edition

Posted on by planeteria

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

The challenge of financing health care in retirement |Kiplinger

Many people ignore the impact health care costs will have on their nest eggs as they age. In fact, only 12 percent of working Americans have taken any steps toward addressing medical expenses in retirement, according to a study cited in HealthView Services’ 2016 Retirement Health Care Costs Data Report. Most people have no idea what the burden will be when they’re left to foot health insurance premiums on their own, perhaps because they chose to retire early or because they were victims of downsizing. And the result is some serious sticker shock.

As enrollment season heats up, workers facing higher health spending | Kaiser Health News

Open enrollment season is under way, and when workers get their health-plan information, many of them can expect higher out-of-pocket costs. As employers cope with rising health costs, some are shifting more of the burden onto their workers, often in the form health insurance plans that carry high deductibles. To help rein in expenses, businesses also will ask their employees to take part in cost-cutting drug programs and new services.

Health care costs may gobble up Social Security benefits | CNBC

Health care costs could drain your Social Security benefits in retirement, especially if you’re a woman.

The average woman could spend an estimated 70 percent of her retirement check on health care costs, according to a recent study by the Nationwide Retirement Institute. The average man fares better, but still uses nearly half of his benefits to cover medical expenses.

The future of retirement communities: Walkable and urban | The New York Times

Few people in America walk to work. Most of us drive to the supermarket. But more older people these days are looking for a community where they can enjoy a full life without a car.

In the age of Fitbit and a growing cohort of active, engaged retirees eager to take their daily 10,000 steps, retirement communities have been slow to change. Eighty percent of retirees still live in car-dependent suburbs and rural areas, according to a Brookings Institution study. Enter a new paradigm: the walkable, urban space. Get out and walk to basic services.

For your retirement planning, count on living until age 95 | USA Today

If you knew your date of death, retirement planning would be a breeze. Unfortunately – or maybe fortunately? – you don’t. And that can make planning for retirement extremely difficult. If you’re like most people, you’re guessing, and guessing quite wrong. Financial advisers are starting to change assumptions about how long clients will live to make sure they don’t outlive their savings, according to a survey by Investment News. Advisers are basing retirement income plans on an average life span of 91 for men and 104 for women.

Drug price hikes may be hitting hospitals harder than consumers | Modern Healthcare

Skyrocketing drug prices have hit hospitals even harder than consumers, according to a recent study from America’s biggest hospital lobbies. Payer reimbursement can’t keep up and nearly all hospitals surveyed said it affected their ability to manage overall healthcare costs, according to the study sponsored by the American Hospital Association, the nation’s biggest hospital lobby, and the Federation of American Hospitals, which represents investor-owned hospitals. The study’s authors determined that, for most drugs, spikes in cost drove spending increases, rather than more people using drugs.

PERACare Open Enrollment Overview

Posted on by planeteria

The Open Enrollment period for PERACare ends on November 10, 2016. If you are enrolled in a PERACare plan now, or if you are considering a PERACare plan for 2017, here are some PERACare Program highlights.

PERACare offers health, dental, and vision plans for PERA retirees and their dependents. There are two health plan categories – one for retirees who are under the age of 65 and not eligible for Medicare (PERACare Pre-Medicare coverage) and one for retirees who are age 65 and older and enrolled in Medicare (PERACare Medicare coverage).

Open Enrollment is the period each year when PERA retirees can make changes to their health care, dental and/or vision coverages. Open Enrollment meetings are scheduled across the state each October and are designed for PERA retirees to learn more about the PERACare Program. There are three presentations at each Open Enrollment meeting and they are each designed for a specific audience. There is a presentation for Medicare enrollees, one for pre-Medicare enrollees, and one for those who are turning age 65 in the next year.

Open Enrollment Meeting Schedule

If you missed the meeting in your area, we have the presentations available online.

Plan Changes for 2017

Perhaps the biggest change enrollees in the PERACare plans will see in 2017 is the change made to prescription drug coverage. There will be four levels, or tiers, of drug costs: generic, preferred brand or formulary, non-preferred brand or non-formulary, and specialty. (Read more about the rapid growth and high costs of specialty prescription drugs.)

Additionally, the health plan options for Pre-Medicare coverage have been streamlined. Retirees who have been in Anthem’s Pathways HMO and High Deductible Health Plans (HDHP) will be automatically enrolled in Anthem’s PPO #1 plan or may choose the PPO #2 plan during open enrollment. Retirees in the Kaiser Permanente HMO #1 plan will be automatically enrolled in the HMO #2 plan, which will become the Deductible HMO plan, or have the option to choose the Kaiser Permanente High Deductible Health Plan during open enrollment.

Lastly, Anthem PPO enrollees are asked to select a Primary Care Physician from Anthem’s network. Instructions to find a PCP are on page 3 of the Pre-Medicare Enrollment Guide linked below. Anthem enrollees are asked to submit a PERACare Enrollment/Change form to select their PCP, even if they are not changing plans.

Details on the plans, coverage levels, and copays may be found in the following publications:

PERACare Pre-Medicare Coverage Booklet

PERACare Pre-Medicare Enrollment Guide

PERACare Medicare Coverage Booklet

PERACare Medicare Enrollment Guide

You may enroll in a PERACare plan, change your coverage, or select your Anthem PCP four ways:

  • Online at copera.org, log in with your User ID and password.
  • Send your completed form to PERA at PO Box 5800, Denver, CO
  • Fax your completed form to PERA at 303-863-3727.
  • Drop off your completed form to PERA at 1300 Pennsylvania Street, Denver.

The deadline to enroll/make changes is November 10, 2016.

Coverage begins January 1, 2017.

If you are currently enrolled and do not wish to make changes, or add dependents, you do not need to do anything. If you have questions and wish to talk to a PERA representative, you may call 1-800-759-7372; or on the PERA website (www.copera.org), click on the “contact us” link.

PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees.
We encourage you to comment with your thoughts and feedback.

Specialty Drugs: Important But Costly Advances in Health Care

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Specialty drugs, also known as biologics, are high-cost prescriptions used to treat complex, severe conditions such as multiple sclerosis, rheumatoid arthritis, or cancer. These drugs usually require special handling and often must be administered by a clinician. They represent the fastest growing sector of pharmacy spending today.

As the use and cost of specialty drugs increase, health care plans must adapt to provide access to more specialty drugs while managing their rapid rise in price and controlling costs that are passed along to consumers.

The 2017 PERACare Program includes changes to the pharmacy drug benefits for both the Anthem and the Kaiser Permanente plans. Each plan includes new tiered levels of prescription drugs and different coinsurance rates. All plans include four different tiers, and each tier has different coinsurance minimum and maximum costs. The tiers include generic, preferred and non-preferred (Anthem) or formulary and non-formulary (Kaiser Permanente), and specialty prescription drugs.

Each PERACare plan’s pharmacy benefits manager or website has more specific information about specialty drugs and their coinsurance costs.

Advances in research and technology led to the development of specialty drugs to improve the health of people with diseases and conditions that were previously life-threatening, untreatable, or both. Specialty drugs are more complex to develop and deliver than traditional drugs and are typically made using human or animal proteins. They may come in many different forms, from gene therapies and insulin to vaccines and pills. As a result of their complexity, both in development and in treatment, they tend to cost much more than traditional drugs, upwards of $600 per month or more.

The value of specialty drugs is significant. They can lessen the negative effects of certain diseases where traditional treatments have not been effective, and they provide treatment options for patients where none were previously available. While specialty drugs first were used to treat challenging or chronic conditions such as multiple sclerosis, rheumatoid arthritis, and some cancers, their use has expanded recently to include a wider range of diseases, including asthma, COPD, cystic fibrosis, HIV/AIDS, immune deficiency, and seizure disorders. For less common diseases like hemophilia, a very small number of people need treatment from a specialty drug, which tends to drive the cost higher to these individuals. In 1990, 10 specialty drugs were on the market. By 2012, over 900 were in development.

Specialty drugs come from specialty pharmacies (such as Accredo, the specialty pharmacy for Express Scripts) with trained pharmacists, nurses, and physicians on staff who can support the complexities involved in providing patients with specialty drugs. Special storage, shipping, and administration are often required, such as temperature control and refrigeration throughout the handling and shipping process.

The cost of specialty drugs is significantly higher than traditional drugs. They are often difficult to research and develop, with many taking six to 10 years before they are even ready for the lengthy approval process under the Food and Drug Administration (FDA). Generic drugs have brought down the cost of many traditional brand drugs, but generic-type alternatives are not commonly available for specialty drugs. It is expected that, over time, specialty drug alternatives (known as biosimilars) will become more common. In 2011 specialty drugs accounted for about 17 percent of an average employer’s overall pharmacy costs, but that is expected to grow to up to 40 percent of an average employer’s total pharmacy spending by 2020.

To help control costs, individuals who require specialty drugs should review the list of drugs covered by their health and prescription drug plans to make sure that a specific drug is covered by the plan. Most plans require pre-authorization from a health care provider in order to cover all or part of the cost of specialty drugs. This helps control costs for both health care plans and individual patients, while helping patients receive the right care for their individual needs at the best cost.

Sources include the Midwest Business Group on Health (www.specialtyrxtoolkit.com) and the National Business Coalition on Health.

PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees.
We encourage you to comment with your thoughts and feedback.

Retiree spending boosts Colorado’s economy, sustains jobs

Posted on by planeteria

A report released by the National Institute on Retirement Security (NIRS) found total spending by retirees in the U.S. delivers over one trillion dollars in economic output and sustains more than 7 million jobs based on 2014 data.

Drilling down further, NIRS researchers looked at retiree spending in Colorado and found 41,000 jobs created and $6 billion in economic impact. [Read more about the economic impacts in Colorado from the NIRS Colorado Fact Sheet.]

These findings reinforce Pacey Economics’ results released last year that show how PERA retiree spending supports 29,000 jobs and generates $5.2 billion in economic output in the state.

For more details on the NIRS study:

Download the report here.

Download the PowerPoint presentation here.

Download a report infographic here.

A map with each state fact sheet is available here.

Listen to a replay of the webinar here.

PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees.
We encourage you to comment with your thoughts and feedback.

Colorado PERA Invests $50M in Boulder Firm

Posted on by planeteria

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

Colorado PERA invests $50M in Foundry Group’s new $500M fund | BizWest

Local venture-capital firm Foundry Group closed on a new $500 million fund earlier in September that will allow the company to invest in growth-stage companies outside its existing portfolio. The new fund is Foundry’s sixth. Last year, the firm closed on its fifth $225 million investment fund. The new fund aligns with the Foundry Group Select fund strategy of providing growth investments for startups from its early-stage funds but will also invest in growing companies that the firm has not previously invested in. Foundry Group is welcoming a few new limited partners with the new fund, including $50 million from PERA’s private equity class investment group.

Why California’s new retirement savings plan may become a national model | Time-Money

A new state retirement saving plan has just been launched in California, which could help millions of workers – both in the state and around the country. The retirement savings plan, called Secure Choice, will provide coverage to some 7.5 million small-business employees in the state who lack workplace plans. The Secure Choice plan will require small employers to auto-enroll workers in an IRA. Having access to a workplace plan is crucial to successful retirement savings. Without that nudge from an employer, especially through auto-enrollment, most workers procrastinate and fail to save. Some 90 percent of workers with employer plans are saving for retirement vs. just 20 percent of those without one, data from Employee Benefit Research Institute show. The launch of an auto-IRA by California, the largest state, adds major momentum to a burgeoning movement to improve retirement security for workers without 401(k)s or other employer plans.

Military prepares for overhaul in retirement benefits | RetirementRevised

The military, which currently has as a traditional defined benefit plan, will adopt a new hybrid program next year that blends an existing defined benefit for career personnel with a matching contribution to a 401(k)-style account aimed at covering those who don’t make a lifelong career of the military. It’s the biggest overhaul in retirement benefits in years – and it’s a mix of good and bad news for military personnel.

Millennials: You’re still not saving enough | CNBC

If you’re young and saving for retirement, you should plan to sock away nearly a quarter of your pay. A recent survey from personal finance website NerdWallet found that a 25-year-old who is earning $40,000 a year will need to have saved 22 percent of pay in a retirement account over the course of his or her career in order to replace 80 percent of annual income by age 67.

Attention, Gen Xers: You’re making a major retirement mistake | The Motley Fool

Caught in a perpetual juggling act of raising children, building careers, and caring for aging parents, Generation Xers (roughly late 30-and 40-somethings) face challenges that extend far beyond the realm of personal finance. But while some Gen Xers are doing a good job of saving for retirement, others are slipping up big-time. According to Transamerica’s latest retirement survey, only 77 percent of Gen Xers are saving for retirement, which means almost a quarter are neglecting to put money aside for the future. Worse yet, they are starting too late and aren’t saving enough.

5 things to do now to get ready for retirement | Washington Post

You are five to 10 years away from retirement and worry that you are behind in planning. You probably are. You certainly are not alone. A third of Americans between 55 and 65 have saved nothing for retirement, according to the . The good news is that if you act now, you can do some catching up. The worst thing to do is sit back and do nothing. Five tips can help you prepare, starting by figuring out where you are in retirement preparation.