Colorado Scores 6 out of 10 in National Survey
How do Coloradans feel about their retirement security? And how do we compare nationally?
Diane Oakley, Executive Director of the National Institute on Retirement Security (NIRS), was recently in Denver to deliver the findings of a survey on public opinion about retirement security nationally and in Colorado. The response to the question about feelings toward retirement security is a resounding sense that Coloradans are facing a retirement crisis. According to Oakley, the top financial worry for Americans is that they will outlive their savings in retirement.
The factors making it difficult for Coloradans to prepare for retirement include flat wages, long-term care, living longer, and fewer pensions (read how PERA’s hybrid defined benefit plan works for Colorado’s public employees). Respondents are also frustrated that policymakers do not understand the difficulties that workers face in preparing for retirement. To cope, Coloradans plan to cut spending and stay in their current jobs longer.
Not surprisingly, retirement accounts are concentrated among higher-income households, and young households are half as likely to have a defined benefit plan as near-retirees. While financial industry experts recommend that workers in their 40s have two to three times their annual salary saved in a retirement account, the average retirement account balance of $28,301 is well below half of the average earnings of Colorado workers.
The Colorado Financial Security Scorecard summarizes the economic outlook for retirement security in the state and gauges the state’s relative performance in three key areas: anticipated retirement income, major retirement costs like housing and health care, and labor market conditions for older workers.
Colorado’s above average score – 6 out of 10 – means that the state’s future retirees have a somewhat lower potential for financial insecurity compared to their peers in other states. However, with fewer than half of all Colorado workers even participating in a workplace retirement plan, many Coloradans face a high risk of living in poverty in their old age.
NIRS advocates for increasing retirement savings for all Americans, which will ultimately lead to a decrease in the need for elderly social services. According to NIRS, proposed models to increase retirement savings should expand coverage to all workers, use auto-enrollment features, and maximize tax benefits to increase retirement saving. See the NIRS data here.
Greg Smith, Colorado PERA’s CEO/Executive Director, currently serves as the Board Chair of NIRS.