The COVID-19 pandemic has had a profound impact on many people’s finances over the past two years – surveys show many people have been saving more money, and the percentage of Americans who say they have savings on hand to cover a $1,000 emergency expense is on the rise. However, that number is still less than 50 percent.
The last full week of the month, Feb. 22 to 25, is America Saves Week, an annual effort by financial institutions across the country to raise awareness of the importance of saving for the future. It’s a good time for a financial “checkup” of sorts – to look at one’s budget and overall finances, and make a plan to save more, if possible.
Saving money is easier said than done, and there’s no one right way to do it. Finding small ways to save here and there can make a huge difference in a person’s financial situation. Each day of America Saves Week highlights a particular savings strategy or theme:
- Monday | Save Automatically: One of the easiest ways to save money is to do it automatically — that could mean a regularly scheduled bank transfer, payroll deduction like a 401(k), or using an app to round up debit card purchases and put the spare change in a savings account.
- Tuesday | Save for the Unexpected: “Unexpected” doesn’t have to mean “emergency.” Establishing a fund for unexpected expenses can mean you’ll have money on hand for special occasions, trips, gifts, etc.
- Wednesday | Save to Retire: It’s never too early to start thinking about retirement and your various options for saving money for your golden years.
- Thursday | Save by Reducing Debt: Paying off debit might not be the first thing that comes to mind when thinking about savings, but reducing debt can help in a number of ways, including raising your credit score and reducing the amount of interest and fees you pay each year.
- Friday | Save as a Family: Having conversations with your kids about money and the importance of saving from an early age can help set them up for financial success later in life.
How PERA helps its members save for the future
Saving automatically and saving for retirement are what PERA has been doing for Colorado’s public employees since 1931. Every member of Colorado PERA, whether they’re enrolled in the Defined Benefit (DB) Plan or the Defined Contribution (DC) Plan, saves for retirement automatically with each paycheck.
In 2020, PERA paid more than $4.2 billion in benefits to more than 107,000 DB plan retirees living in Colorado, with an average monthly benefit of $3,204.
PERA also offers the optional PERAPlus 401(k) and 457 plans, which allow members to set aside an additional pre-tax portion of each paycheck. And with new lifetime income options in the PERAPlus and DC plans, members have even more options to help make their savings go further in retirement.
When PERA On The Issues asked PERA members about the most useful piece of advice they’d like to pass on to others, several of them mentioned saving in a PERAPlus 401(k) or 457 account in addition to the DB Plan.
“Enroll in the PERA Defined Benefit Plan and start saving in a 401(k) or 457 plan the first month of your employment,” said Rob W., a retiree from Salida.
“If you are a working PERA member, stay in PERA if you are in a job you enjoy doing,” said Mike M., a retiree from Westminster. “A retirement plan such as PERA can provide you with retirement security at a time when you need it in later years.”
PERA will be sharing savings tips on social media throughout America Saves Week, so give us a follow on Facebook, Twitter, and Instagram to join the conversation.
Defined benefitAlso known as a pension, this is a type of pooled retirement plan in which the plan promises to pay a lifetime benefit to the employee at retirement. The plan manages investments on behalf of members, and the retirement benefit is based on factors such as age at retirement, years of employment and salary history.Defined contributionA type of individual retirement plan in which an employee saves a portion of each paycheck (along with a potential employer match) and invests that money. The employee’s retirement benefit is based on their account balance at retirement. A 401(k) is a type of defined contribution plan.
