#NRSW18: What's Your (Retirement) Plan?

October 25, 2018

Young people sometimes have a tendency to think that the world revolves around them, and in the case of the millennial generation, this might actually be true. Today’s early and mid-career professionals have grown accustomed to being studied like the titular alien in “E.T.” They’ve been figuratively poked and prodded from every angle as researchers from various fields try to figure out what they buy, believe, do, and like—or just as often, dislike.

One area where millennials have received considerable attention is money: their career choices and goals, their preference for experiences over things, and how they spend and save their earnings. As the provider of retirement security to Colorado’s public employees, and considering that it’s National Retirement Security Week, this last category is of particular interest to PERA.

Retirement security is an inherently complicated topic made even trickier by the wealth (pun intended) of statistics that tell any number of stories. That’s because for every study that shows how conscientious young people are about planning for their financial future, there’s another one claiming that most of them have barely given it a second thought.

Whether you’re more inclined to try and weed through this confounding data or to squeeze your eyes shut and hope that one day the Retirement Fairy will tap you with his magic, wealth-creating wand, The Dime is here to help you better understand these often intimidating concepts. (And spoiler alert: There is no Retirement Fairy.)

The simplest way to begin is by illustrating, as we regularly do, the benefits of choosing a public-sector career with a Colorado PERA-sponsored employer. This gives you access to a defined benefit (DB) plan that, by definition, takes a lot of the guesswork out of your retirement planning, because you pay into it according to a specific schedule and the money—which earns interest on your contribution amounts—is waiting for you when you leave, whether that’s after five, 10, or 40 years. It’s this portability aspect of the plan—the ability to take your money with you when/if you leave—that emulates a defined contribution (DC) plan design, and ultimately makes it so unique.

The hybrid nature of PERA’s plan also happens to deliver the highest percentage of salary replacement income in retirement—for short-term as well as career public employees. And that’s not according to us; that’s what an independent, third-party firm commissioned by the Colorado General Assembly found.

The other great thing about PERA’s DB plan is that the money follows you around, earning interest the whole time, for as long as you remain in public service. Maybe you start out as a public school teacher and later decide to work for a legislator, or even run for office. Or you drive a snowplow in the mountains for a few years to maximize your powder days, and then roll down the hill to become an admissions officer at Metro State. All the money you’ve paid into your PERA plans stays in your account, growing every year and further securing your twilight years.

With millennials (and the rest of us) becoming increasingly dubious that the promises Social Security has made will eventually be kept, maybe it’s time to take a closer look at a purpose-driven career in public service, one whose short-, mid-, and long-term benefits—financial and otherwise—can help the world that currently revolves around you become a whole lot better for you and for everyone else.