Colorado PERA offers much more than a traditional pension plan. If you sock away more for retirement in the PERAPlus 401(k) or 457 Plan you will:
- Not miss what’s not there. Money invested in a PERAPlus Plan comes out before you get your paycheck so you won’t have a chance to spend it. Consider choosing to invest a percentage of your pay so you’re automatically saving more as your paycheck grows. Even the cost of a few cups of coffee saved every month can add up over time.
- Lower your tax bill. Saving in a PERAPlus Plan on a tax-deferred basis means the money doesn’t count toward your gross income for the year and will therefore lower your taxable income. Additionally, you won’t have to pay taxes on the money or its earnings until you withdraw it at retirement. You can also go a step further and contribute to a PERAPlus Plan on a tax-paid basis using the Roth option (if available through your employer) to diversify your tax burden at retirement because those amounts will grow and be withdrawn on a tax-free basis.
- Effortlessly buy low and sell high. Buying low and selling high is a strategy used by sophisticated investors. When you invest in a PERAPlus Plan with every paycheck, by default you buy fewer shares when the cost is high and more shares when the cost is low.
- Let earnings snowball. Think of your PERAPlus Plan account like a snowball: you start with a small snowball (your initial investment) and begin to roll it down a hill. The snowball picks up more snow (earnings) and that snow begins to build on itself—making your snowball (your account) grow more quickly over time.
- Hire an expert, but skip the high-dollar demands. Let the fund managers, like BlackRock and Wells Fargo, monitor every investment and try to make money even in a down market. Beyond that, by investing in a PERAPlus Plan rather than directly through a mutual fund, you avoid minimum investment requirements that can start at $500 and run up to $10,000 or more. Your fees in the PERAPlus Plans will likely be lower than by directly investing in a mutual fund, too. In fact, beginning July 1, fees for funds available in the Plans were reduced by 4 basis points.
- Outsource the worry too. You don’t have to hunt through thousands of mutual funds to find those that offer performance and a low cost. Funds available through the PERAPlus Plans are carefully chosen and are held to PERA’s high standard for inclusion in the Plans. PERA monitors the funds on an ongoing basis to make sure they continue to meet quality standards.
- Take a helping hand. You can access free advice that will help you choose the right investments to meet your goals. Or let someone else choose and monitor your investments on an ongoing basis for a nominal fee.
- Pay yourself, not the bank. You can take a loan from the money in your account. You’ll still have to pay interest on the loan as you repay it, but the interest goes directly back into your account and not into a bank’s pocket. The Plans also have provisions that allow you to withdraw your money in the event of certain emergencies.
- Allow your money to stay, even if you don’t. If you leave PERA-covered employment in the future, you can keep your PERAPlus account and continue your long-term investment strategy using PERA’s low-cost investment options.
- Prepare to enjoy retirement. We’ve all heard the idiom about not putting all your eggs in one basket. For retirement planning, that means saving in many different types of accounts, not just one. In the PERAPlus 401(k) Plan and 457 Plan (if your employer participates), you can save as much as $36,000 in 2017 by saving the maximum amount in each plan. You can contribute even more if you’re age 50 or older. Compare that to the annual limit to an IRA, which is just $5,500 in 2017.
To learn more about enrolling in a PERAPlus Plan, visit the PERAPlus 401(k)/457 and PERA DC Plan Information page or call 1-800-759-7372 and select the PERAPlus option. Remember that you should consult with a trusted financial professional or adviser to see how investing in a PERAPlus Plan fits into your overall savings strategy.