A friend of mine is taking a holistic approach towards their health. My first thought was that they were going to see a doctor at Whole Foods. Obviously I had misinterpreted what they were saying and didn’t recognize that there was no letter "W" in this particular "holistic." Maybe they were going to use some herbal therapies? No, that would be homeopathic.
So what is a holistic approach?
It’s the process of looking at a whole system rather than just focusing on its component parts. It recognizes that a system is often interconnected, and that synergies exist between components that make the whole greater than the sum of the parts. The whole system is capable of results or actions that would not be implied if each of its parts are taken individually.
Think about how seldom things have ever worked out exactly as you initially intended. How often do your best-laid plans get you directly from A to B without some unknown variable C either enhancing or deterring the outcome? Wasn’t it more like a synergy of many moving parts that created the opportunities for good and bad outcomes that you never envisioned before the whole process started? I’ve asked successful people what their secret is, and none of them can recall a specific event or factor. Instead, they point to a series of events and factors that individually provided opportunities or alternatives. That is, the synergy of these parts is what led them to success.
How does PERA fit into a holistic financial plan?
A holistic approach to financial planning would consider multiple moving parts, including family, education, career, health, and retirement issues. That’s where you can see the holistic value of the hybrid retirement plan offered by Colorado PERA, because it can be personalized to fit your specific situation. Combining PERA’s Defined Benefit (DB) Plan and voluntary savings plans offered through the PERAPlus program with survivor benefits and portability gives you the flexibility to build a plan that can adjust to your path as it changes, or one that can just run in the background while you deal with immediate and everyday issues.
That’s why it makes sense to look at the individual parts of PERA’s Plan and consider how they work together. The DB Plan component builds lifelong retirement income based on years of service. If you remain in the public sector for your entire career, you can count on receiving a steady pension in retirement.
Meanwhile, the PERAPlus 401(k) and 457 Plans allow you to contribute to your retirement at a level consistent with your personal situation. If you’re still paying down your student loans or saving for a down payment on a house, you can dial it back. If you are increasing your savings in your final years of employment, you can contribute more.
You also have portability if you transfer to another PERA employer. Your PERA DB Plan simply transfers with you and you keep contributing to the same account. If you leave PERA-covered employment and leave your account with PERA, your account continues to accrue interest and you can access your retirement benefit when you become eligible. Or if you return to PERA employment in the future, you will continue to build upon your original PERA account.
When you view your retirement planning holistically, you’ll find that PERA is a very solid fit. The hybrid combination of traditional DB and voluntary plans, offered across many public employers with portability and continuation, provides flexibility and resilience greater than what is available in any individual plan. It’s the synergy of these parts that creates this holistic system.