While some experts have been predicting a recession in the U.S. for months, the stock market continues to show significant gains, prompting debate about whether current trends will continue. Here’s what multiple experts say about the state of the economy and what may be in store for the months ahead.
The Federal Reserve launched a new system that aims to speed up and modernize money transfers in the United States. The system, called FedNow, will allow for instant transfers any time of day, eliminating the current days-long lag period when sending money. The service is launching with several dozen banks and service providers, with more expected to sign up.
Moderna and Merck are moving to the next phase of testing a promising new vaccine for cancer. The experimental mRNA vaccine can be personalized to a patient’s cancer, and researchers will be testing whether it’s effective in people who have had tumors removed and are at high risk of the cancer returning.
If you’re in a relationship with someone who is significantly older or younger, you may find yourselves in a tricky situation when the older partner reaches retirement age. Here are some things to consider and tips for navigating conflict when one partner enters another stage of life before the other.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
The Colorado General Assembly wrapped up its legislative work in May, but there’s still plenty of activity happening at the State Capitol.
Every year in between legislative sessions, PERA appears before various legislative committees that oversee PERA and its financial health. It’s an important part of the ongoing review and oversight of PERA and an opportunity to engage with the legislators who can have a direct impact on PERA and its members.
While lawmakers won’t be introducing bills between now and January, they may begin work on new PERA-related legislation they intend to introduce in the next session.
Here’s a look at what to expect this summer and into the fall.
The state legislature created the Pension Review Subcommittee in 2018. It’s a subcommittee of the Pension Review Commission, which oversees PERA and the state’s police and firefighter pensions. The Pension Review Subcommittee is charged with reviewing PERA’s financial health and making recommendations to the larger Commission. The Subcommittee comprises four state lawmakers as well as 10 appointed members of the general public with financial experience or knowledge.
The Subcommittee held its first meeting of the year on July 17. Interim Executive Director and Chief Investment Officer Amy C. McGarrity and Public and Government Affairs Manager Michael Steppat gave the Subcommittee an update on PERA’s 2022 financial results and answered questions from Subcommittee members.
The Subcommittee may continue to hold meetings throughout the interim period, with PERA to provide information and answer questions as needed.
Legislative Audit Committee
The Legislative Audit Committee is next up, with a meeting scheduled for Aug. 7.
Every year, the state hires an independent auditor to audit PERA’s financial data and internal controls of the most recent Annual Comprehensive Financial Report. The outside auditor will present its findings at the Legislative Audit Committee’s meeting. PERA staff will join PERA’s actuarial consultants at the meeting to discuss the plan’s finances and answer any questions.
Pension Review Commission
PERA also appears before the Pension Review Commission in between legislative sessions. The Commission has the responsibility of overseeing PERA and proposing legislation that could affect the plan and benefits. For example, the Pension Review Commission drafted bills in recent years to make up the state’s missed 2020 payment of $225 million to PERA.
In addition to the various interim oversight committees, the legislature’s Joint Budget Committee and House and Senate Finance Committees hold annual meetings to discuss PERA’s finances. Those meetings are expected to take place prior to and immediately following the start of the next General Assembly, respectively.
PERA On The Issues will be following the various interim activities and reporting on any noteworthy developments. Be sure to subscribe to our biweekly newsletter to stay updated
Generation X – the group of Americans born between 1965 and 1980 — 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.
With the oldest members of Generation X soon approaching retirement, it’s important to look at where they stand financially. New research from the National Institute on Retirement Security (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.
Access to employer-sponsored retirement plans
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.
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.
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.
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.
Generation X’s retirement readiness
Image courtesy: National Institute on Retirement Security (click/tap to enlarge)
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.
Additionally, 40 percent of Gen Xers have accounts with no balance at all, according to NIRS.
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.
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.
How PERA combines the best of DB and DC plans
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.
The PERA Defined Benefit Plan is available to all PERA members and is designed to provide lifetime income in retirement. The average monthly benefit was $3,238 in 2022.
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.
PERA also offers the optional PERAPlus 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.
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.
Federal officials released their highly anticipated list of the first 10 prescription drugs for which Medicare will aim to cut prices as part of its new price negotiation program. The list includes popular blood thinners, diabetes medications, auto immune drugs, and others.
At the Federal Reserve’s annual conference in Wyoming, Chair Jerome Powell hinted that the central bank isn’t going to be reducing interest rates any time soon. Powell said the economy still isn’t slowing down as much as expected, meaning additional hikes may be needed to rein in inflation.
The federal government released proposed new regulations that would require brokers of cryptocurrencies and other digital assets to file tax forms beginning in 2025. Officials say the new rules are an effort to crack down on tax evasion on digital finance activity.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
The State of Colorado released its annual audit of Colorado PERA’s financial reporting and internal controls, finding no issues that needed attention.
The State presented those findings at a meeting of the Legislative Audit Committee on Monday, Aug. 7. The hearing included presentations from the Office of the State Auditor, the state’s outside auditor, Colorado PERA, and PERA’s actuarial consultants.
Results of outside audit
The State of Colorado hires an outside auditor to conduct the audit of PERA each year. Since 2015, CliftonLarsonAllen has done that work, examining PERA’s financial statements — including the Annual Comprehensive Financial Report — for the year ended Dec. 31, 2022, as well as PERA’s compliance and internal controls.
The auditors gave PERA’s annual report a clean audit with no significant issues or recommendations. In addition, the auditors found no outstanding recommendations from the previous year’s audit.
PERA’s actuarial consultant, The Segal Group, also presented highlights from the annual Signal Light report, which is an analysis intended to help assess the plan’s funding progress and provide a format for communicating this information using a color-coding system similar to a traffic signal. That report is available online here.
PERA will continue to meet with various legislative oversight committees throughout the summer and fall. Click here for more on what’s ahead at the Capitol.
The Colorado legislature passed a law that created the Prescription Drug Affordability Board in 2021. That board has the power to set maximum prices for up to 12 drugs a year, and the board has released the first five drugs it aims to cap. The drugs include costly medications to treat various autoimmune diseases, cystic fibrosis, and others.
The credit-rating agency Fitch Ratings recently downgraded the United States’ rating slightly from AAA to AA+. That move primarily affects the cost of government borrowing, but there could be some ripple effects for everyday Americans, as well.
For the first time, the collective amount of credit card debt Americans hold has reached $1 trillion. Card balances have been on the rise for a while, and experts say that’s likely to continue since interest rates and prices for goods and services remain elevated.
Americans are living and working longer, and that means there’s growing attention to the benefits needs of the aging workforce. One benefit companies are beginning to offer that we could see expand in the coming years is so-called “grandternity” leave for workers who want to take paid time off for the birth of a grandchild.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
