The Internal Revenue Service has released updated tax brackets for 2023, which account for the rising costs of goods and services. The IRS is implementing a number of other tax adjustments as well, including increasing the standard deduction and the earned income tax credit. The changes take effect for the 2023 tax year, meaning returns filed in 2024.
Another important change coming in 2023 is an increase in the amount of money employees can contribute to retirement accounts like 401(k)s and IRAs. The contribution limit will increase to $22,500 for 401(k), 403(b) and 457 plans, and $6,500 for traditional and Roth IRAs.
Wearable technology like smartwatches could soon be more helpful for people living with diabetes. Researchers say they’ve developed an accurate, non-invasive way to measure blood glucose that’s similar to how current smartwatches measure blood oxygen. More testing is needed before the technology can be use in commercially available products.
You’re probably familiar with the idea of a gap year, in which high school graduates take time off to travel and gain other life experiences before starting college. There’s now a growing trend of retirees taking a similar approach and venturing out on extended vacations on a shoestring budget — think staying at hostels and backpacking rather than going on a cruise or guided tours.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
If you follow the stock market and investing news, you may have noticed a term that’s been gaining in popularity in recent years: ESG.
ESG is an acronym for environmental, social, and governance factors. It’s a widely used caption for labeling non-traditional aspects of a business that may have a financial impact on a company and its investors.
The term “ESG” is sometimes used to describe business or investment strategies perceived to have a global sustainability focus. However, that may be a misnomer.
Evaluating business practices through an ESG lens
Click to view infographic
Rather than being a one-size-fits-all way to describe a company or investor, ESG is intended to be a way to describe nuanced inputs, outputs, and operations that can affect the environment, society, and/or business governance. These factors may or may not be financially relevant to a company and its investors.
Take a soda company for example. The company’s usage of water, an important ingredient in soda and other drinks, makes it neither an ESG nor non-ESG company. Instead, water could be considered a financially relevant input with implications for business that can be labeled through an ESG lens. Water is a natural resource, and it therefore can be considered an environmental factor. How the company accesses and uses that water in relation to the local community can be considered a social factor, and how the company adapts its strategy to changing supply, demand, regulation, and technology could be considered a governance factor.
How the company approaches these and many other elements of its business can affect its ability to remain competitive in its industry. Competitiveness and profitability are important to companies and their investors, and ESG is just one way to label various factors that may influence long-term financial outcomes.
As investors managing the retirement funds for nearly 700,000 members and retirees, it’s important for PERA to consider financially relevant factors when managing the portfolio, regardless of how they are labeled, or whether they may also have non-financial impacts.
PERA’s investment approach
PERA invests with one objective: to provide present and future benefits for our members and their beneficiaries. To that end, our approach to Investment Stewardship is to seek out investments that are expected to provide the best risk-adjusted returns. PERA values financial sustainability first and foremost, and we do not invest to suit the personal beliefs of any one person or entity.
PERA staff consider a wide variety of financially relevant factors when deciding what to include in the portfolio, including some that can be labeled as environmental, social, or governance-related. As of Dec. 31, 2023, PERA staff managed approximately 60 percent of the Fund in-house with most of those assets in actively managed portfolios using this integrative approach. PERA does not have any ESG-centric investment requirements and does not screen investments based on any specific ESG criteria.
“As ESG terminology becomes more prominent, it’s important that our members know PERA’s priority is maximizing long-term, risk-adjusted returns so we can continue paying benefits for decades to come,” said PERA Director of Investment Stewardship Tara Stacy. “By focusing on financial sustainability in our investment decisions, we uphold the fiduciary duty we owe to PERA members and their beneficiaries.”
For PERA members in the Defined Contribution Plan or a PERAPlus 401(k) or 457 plan who want to invest their own savings in companies that are screened on ESG criteria, PERA offers the PERAdvantage Socially Responsible Investment Fund. The SRI Fund is designed for long-term performance through investment in companies that have demonstrated leadership in ESG-related practices — that is, companies that have shown an ability to manage risks and take advantage of opportunities associated with environmental, social and governance issues. Participants may also choose from a large variety of investments within the self-directed brokerage option.
To learn more about how PERA integrates various financially material factors into its investment decisions, read the Investment Stewardship Report, available online here.
In this age of rising health care costs, Medicare announced a rare decrease for next year. The premium for Part B, which covers things like outpatient care and doctor’s visits, will drop by about 3 percent in 2023. The annual deductible for Part B will also decrease.
The recently passed Inflation Reduction Act included $15 million for the Treasury Department to look into simplifying the tax filing process, with the goal of making it easier, faster and less expensive. Officials say an updated system could allow many people to file their taxes with just a few clicks and without having to pay for tax preparation services or software.
Several large administrators of employer-based retirement plans are teaming up to help reconnect people with plans they left behind at old jobs. The partnership will aim to automatically move a 401(k) to a worker’s new employer plan, when possible, or the worker can choose to cash out.
During the COVID-19 pandemic, social support groups for people with dementia moved online like many other activities. As many people resume in-person activities, these online “memory cafes” are finding that they can continue to reach people they wouldn’t otherwise if they were strictly in-person.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
October is National Retirement Security Month — a time to examine one’s financial situation, assess progress toward retirement savings goals, make plans to get on track, or make a goal and get started.
Retirement security is at the core of everything we do and everything we offer at PERA. This commitment is reflected in our mission statement: To provide retirement security for our members while ensuring the sustainability of the fund.
In 2021, PERA paid $4.35 billion in retirement benefits to more than 110,000 Colorado retirees. Each of those retirees can rely on receiving regular income from PERA’s Defined Benefit Plan for as long as they live.
Some PERA employers offer a choice between the Defined Benefit (DB) Plan and the Defined Contribution (DC) Plan, and PERA members also have access to optional PERAPlus 401(k) and 457 plans to save more for retirement. Knowing what combination of plans to choose can be challenging.
To help members further bolster their retirement knowledge and security, PERA launched an online Financial Wellness Library with a regularly updated collection of articles on retirement planning. These articles put into perspective the many factors that can impact saving for retirement, while providing suggestions that make the planning a little easier.
Financial Wellness Library
The educational content in PERA’s Financial Wellness Library is split into numerous sections, including: creating a budget, investing basics, preparing for life events, protecting your assets, saving and planning, getting ready to retire, and activities in retirement as well as links to PERA benefits and tools to help you achieve your financial goals.
There’s also a link to additional financial wellness content from Empower Retirement, PERA’s partner in administering the PERAPlus 401(k), 457 and DC plans.
In addition to general financial literacy information, the library includes articles to help you get more familiar with your PERA benefits and how they can help you meet your goals:
Get the Most Out of PERA: View Your Member Dashboard: Learn about the features available when you log into your member account on copera.org, including checking your account balance, seeing your estimated monthly retirement benefit, submitting forms and more.
PERA is With You Every Step of the Way Throughout Your Career: Whether you’re new to PERA or getting ready to retire, we have resources available to help you make the most of your benefits.
The Benefits of PERA Membership Start Well Before You Retire: PERA is more than just a retirement plan; we also offer survivor and disability benefits, voluntary savings plans and more.
Four Things New Members Should Do: If you’re new to PERA, this is a great place to start on your path to retirement security.
