There are just a couple of things almost all Pinnacle West Capital retirees need when they hit retirement: predictable income and protection against a cluster of risks, which include longevity risk, performance risk and sequence-of-returns risk.
In the past we have seen retiring Pinnacle West Capital employees utilize the “4% rule,” where retirees take annual withdrawals start at 4% of the entire portfolio and increase with inflation. They then keep the remainder of the portfolio with at least 50% invested in equities. Based on historical data, this would give a Pinnacle West Capital retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Pinnacle West Capital retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Pinnacle West Capital retirees need to prepare for expenses over a longer time frame. In the past we would plan for a 15 to 20 year retirement, but now we need to prepare for a 30 to 35 year retirement. What is available to assist meeting the 35-year time frame?
The annuity strategy can assist with a few of the pitfalls we see in the 4% rule. For example:
If you need $50,000 per year in retirement and need that for 30 years, you may need $1.2 million in fixed income at a 3% interest rate. BUT if you look to fund $50,000 for 30 years, you can cover that expense with $800,000 by choosing the annuity option.
The other pitfall with the 4% rule is that it may not reflect a client’s risk tolerance. When you are accumulating assets, you can afford more volatility and can take on more risk than when in the retirement and withdrawal phase after leaving Pinnacle West Capital.
Also, should we see a drop in the market, you would be able to reduce your income using the 4% rule, which you cannot do if you choose an annuity option.
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What is the primary purpose of the 401(k) Savings Plan at Pinnacle West Capital?
The primary purpose of the 401(k) Savings Plan at Pinnacle West Capital is to help employees save for retirement through tax-advantaged contributions.
How can employees enroll in the 401(k) Savings Plan at Pinnacle West Capital?
Employees can enroll in the 401(k) Savings Plan at Pinnacle West Capital by accessing the benefits portal or contacting the HR department for guidance.
What types of contributions can employees make to the Pinnacle West Capital 401(k) Savings Plan?
Employees can make pre-tax and Roth (after-tax) contributions to the Pinnacle West Capital 401(k) Savings Plan.
Is there a company match for contributions made to the 401(k) Savings Plan at Pinnacle West Capital?
Yes, Pinnacle West Capital offers a company match for employee contributions to the 401(k) Savings Plan, which enhances retirement savings.
What is the maximum contribution limit for the 401(k) Savings Plan at Pinnacle West Capital?
The maximum contribution limit for the 401(k) Savings Plan at Pinnacle West Capital is subject to IRS guidelines, which are updated annually.
Can employees change their contribution percentage to the Pinnacle West Capital 401(k) Savings Plan?
Yes, employees can change their contribution percentage to the Pinnacle West Capital 401(k) Savings Plan at any time through the benefits portal.
What investment options are available in the Pinnacle West Capital 401(k) Savings Plan?
The Pinnacle West Capital 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and stable value funds.
When can employees access their funds from the Pinnacle West Capital 401(k) Savings Plan?
Employees can access their funds from the Pinnacle West Capital 401(k) Savings Plan upon reaching retirement age, termination of employment, or under certain hardship circumstances.
Are there any fees associated with the Pinnacle West Capital 401(k) Savings Plan?
Yes, there may be administrative and investment fees associated with the Pinnacle West Capital 401(k) Savings Plan, which are disclosed in the plan documents.
How often can employees review their account statements for the Pinnacle West Capital 401(k) Savings Plan?
Employees can review their account statements for the Pinnacle West Capital 401(k) Savings Plan on a quarterly basis.
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