I’ve been reading the full Commonwealth of Kentucky Pension Performance and Best Practices Analysis. I’m no financial expert, but I do a fair amount of reading on the subject of retirement.
The one thing that struck me as out of the ordinary was their assumptions for distributions from their new 401(k)-style plans. They propose that a retiree would withdraw 7 percent at age 55 to 9 percent at age 67.
These withdrawal rates are highly suspect. A safe withdrawal rate for a 30-year time frame falls at 4.5 percent or lower. The higher your withdrawal rate, the more likely your money will run out. Why would they then assume such high withdrawal rates when all of the research has shown them to be unsafe? What other horrible advice will they be giving to retirees?
If these assumptions are acted upon, they will not allow retirees the dignity they are promising.