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.
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.
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.
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.
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, providing a great opportunity as the year winds down to take a look at one’s finances, goals, and plans for retirement.
With recent research showing that many of us greatly underestimate how long we’ll live, it’s important to plan ahead and make sure you’re on track to reach your retirement goals.
If you’re a member of the PERA Defined Benefit Plan, you’re already set for lifetime income in retirement. But if you’d like to do more to ensure your retirement security, there are steps you can take.
PERA has been sharing tips throughout October on Facebook and Twitter, and we’re wrapping up National Retirement Security Month with some more helpful information here.
Consider some of the items below if you’re taking stock of your financial health this month:
Save additional money in a PERAPlus plan: PERA offers a voluntary PERAPlus 401(k) Plan to all members, and some PERA employers also offer the PERAPlus 457 Plan. Both plans allow you set aside additional pre-tax dollars (there’s also a Roth option) on top of what you contribute to your PERA Defined Benefit Plan or PERA Defined Contribution Plan account.
Make a savings plan: A recent survey found that a surprising number of Americans have no savings account at all. Saving money is easier said than done, but making a plan to save even a little bit at a time can make a huge difference (not to mention you can take advantage of historically high rates on savings accounts right now).
Take full advantage of your HSA, if you have one: If you have a high-deductible health plan with a health savings account (HSA), you might not be aware of its retirement-planning benefits. In addition to setting aside pre-tax dollars for health care expenses (one of the biggest expenses in retirement), your HSA balance is available to spend on other needs once you reach age 65. Your HSA is also exempt from required minimum distributions (RMDs).
Don’t forget estate planning: Estate planning isn’t just for the wealthy, and it’s not just for deciding who inherits your assets. Good estate planning can also make sure your loved ones know what to do if you’re no longer able to care for yourself.
Download the new PERA mobile app: The PERA app allows members to access important information like account balance, projected monthly benefit, and service credit history, as well as fill out forms (and even apply for retirement) from their mobile phone.
Regardless of where our members are in their public service career, we have a lot of helpful resources on PERA benefits available online, including:
Major drug manufacturers say they will participate in Medicare’s new drug price negotiation program. The government has identified the first 10 drugs for which it aims to lower prices under the program. At the same time, drugmakers are fighting the program, arguing that lowering prices will cut into their research and development budgets.
Beginning next month, life insurance companies in Colorado will be prohibited from using artificial intelligence (AI) and other technologies in a way that leads to discrimination based on protected characteristics such as race and gender. Colorado is the first state to enact such a law specific to the use of emerging technologies in insurance underwriting.
Members of the United Auto Workers union are on strike across the country, asking for higher wages but also the return of defined benefit pensions. While workers hired before the Great Recession have access to a pension, newer workers don’t. Automakers say the costs of reopening their pension plans are too high, but unions argue the companies can afford to once again offer the valuable benefit.
It’s common for workers who leave a job to take their 401(k) account balance with them and roll it over into another account such as an IRA. But workers who seek out advice on rollovers might not always get the best advice. That’s because rollover advice can fall outside the legal guidelines for fiduciaries, who are required to act in their clients’ best interests. Experts expect the federal government to issue a new rule soon to close those loopholes.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.
At its September meeting, the PERA Board of Trustees kicked off an important analysis of PERA’s investment portfolio and strategy. Known as an asset/liability study, the project will help Trustees determine whether changes are needed to PERA’s mix of investments.
The importance of asset allocation
PERA’s strategic asset allocation—the mix of stocks, bonds, and other investments that make up the portfolio—is the most important factor that drives the fund’s investment performance. PERA needs to be able to pay monthly benefits to current and future retirees for decades to come, so it’s important we have a portfolio that supports that mission.
Each category of assets serves a distinct purpose, with the result being a diversified portfolio that’s meant to withstand ups and downs in the market and produce returns over the course of decades. Read more about the role each asset class plays in our series, Asset Classes Explained.
The Board is responsible for determining the asset allocation, which staff then implement. The PERA Board typically conducts an asset/liability every four or five years and adopted PERA’s current asset allocation following the last study in 2019. That study resulted in the following targets:
Asset class
Long-term target
Permissible range
Global Equity
54.0%
48% to 60%
Fixed Income
23.0%
18% to 28%
Private Equity
8.5%
4% to 13%
Real Estate
8.5%
4% to 13%
Alternatives
6.0%
0% to 12%
Cash
0.0%
0% to 3%
The actual percentages in each asset class can vary based on market fluctuations, but must fall within the allowable range set by the Board. This ensures PERA’s portfolio is in line with the Board’s goals and strategy.
Through the process of regular asset/liability studies, the Board has made incremental adjustments to PERA’s asset allocation over time to achieve an annualized return of 8.3% over the past 30 years.
What is an asset/liability study?
Over the next several months, PERA’s investment consultants will work with staff and the Board to conduct the asset/liability study. It’s an in-depth analysis that looks at various factors, including:
The relationship between assets (investments) and liabilities (benefits owed): The study will involve modeling various scenarios over time to see how different investment decisions could impact the plan’s funding long-term. Are there any asset mixes that are more likely to help PERA reach its funding goals?
The fund’s risk tolerance: How much risk can the fund take on appropriately? Should the portfolio include more potentially volatile investments like stocks, or more lower-risk investments like bonds? Increasing the amount of risk can bring the potential for higher returns while lowering risk can protect the fund from losses in down markets.
Market conditions: Since PERA is a long-term investor, it’s important to look at what the future might hold. While the Board doesn’t have a crystal ball, it will work with experts to forecast market conditions for the various asset classes to understand the potential returns over the next several decades.
The study will help the Board determine if the current mix of investments is appropriate to help PERA reach its funding goals, or if changes are needed to adjust the level of risk in the portfolio. If the Board decides to make changes to the strategic asset allocation, staff will work to modify the portfolio accordingly.
The Board expects to dive deeper into the details at its November meeting, with the possibility of finalizing the study as soon as the spring.
