LOUISVILLE, Ky. (WDRB) -- The typical Kentucky teacher retires today at age 59 with a pension of $3,043 per month – a payout that is guaranteed by the state for the rest of her life regardless of what happens in the stock market or the broader economy.

If that same teacher instead had a 401(k)-like retirement plan favored by Gov. Matt Bevin and Republican legislative leaders as a solution to the state’s pension woes, she would need to accumulate about $674,000 in savings over her career to have the same retirement security.

Brett Corbin, a financial planner in Louisville, said that’s “a ton of money” for middle-class workers to build up in an account. While it can be done, Corbin said, few private-sector workers with similar individual plans are on track to have that level of savings at retirement, he said.

“We deal with the wealthiest people in the community and we don’t see that very often,” said Corbin, part of the Corbin Financial Group of Raymond James.

In fact, the median U.S. household nearing retirement (age 55-64) has only $135,000 in 401k and IRA accounts, or enough to provide only $600 a month in retirement, according to an analysis last month by the Center for Retirement Research at Boston College.

As lawmakers in Frankfort continue to debate a bill that would shift many state and local government employees out of traditional pensions, WDRB News estimated the amounts those workers would need to save in 401(k)-style plans to replicate the guaranteed lifetime pension benefits they get today.

The analysis shows that workers in the County Employees Retirement System would need about $200,000 to guaranty the typical annual pension of $11,264 beginning at age 60; while workers in the Kentucky Employees Retirement System – the state’s biggest and worst-funded plan – would need about $385,204 to equal a lifetime pension of $20,633 starting at age 57.

To estimate the lump-sum value of traditional pensions, WDRB used average retirement ages and benefit figures for retirees in the state systems, along with prices for private-market lifetime annuities paying the same amount.

The annuity quotes were obtained from immediateannuities.com, the same site used by the Boston College Center for Retirement Research in its recent paper.

If anything, the estimates likely understate the amount workers would need to have in their accounts because they don’t include provisions like cost-of-living increases to keep up with inflation or payments to spouses following the beneficiary’s death.

The typical teacher retiring at 59, for example, would need about $840,000 to buy an annuity whose payments would increase 2 percent a year to keep up with inflation, said Mark Lamkin, a certified financial planner and president of Lamkin Wealth Management in Louisville.

Kentucky has run up one of the biggest pension debts of any state in the country.

The state needs at least $33 billion, and as much as $84 billion, to fund pensions already promised to government workers, a “real crisis” that threatens funding for schools and other priorities, state budget director John Chilton told lawmakers Thursday.

The idea of shifting workers towards 401(k)-like accounts is part of a wide-ranging reform plan meant to whittle down the state’s pension debt, though Chilton could not say exactly how much the reform would save.

“When you are in a hole, you have got to stop digging, and this reform is a way to stop digging,” said state Sen. Joe Bowen, a Republican from Owensboro and chairman of the legislature’s pension oversight board, at the meeting Thursday.

But Brent McKim, president of the Jefferson County Teachers Association, the union representing about 6,000 local teachers, said proponents of the pension reform plan have an “absolutely unrealistic expectation” as to how much teachers will be able to amass in 401(k)-like accounts.

“If we look at private sector and the reality, the accumulation of real people in real defined contribution plans is far lower than what it would require to replicate the benefit they had in their defined benefit plan,” McKim said.

But with disciplined saving and good investment returns, teachers in fact have the ability to match and perhaps exceed the value of the pension benefits, according to supporters of Bevin’s plan.

“I think it is going to come pretty close to approximating what they would get,” said state Rep. Jerry Miller, a Republican from eastern Jefferson County.

Last month the Bevin administration released a projection showing a teacher with the typical starting salary of $42,000 at age 24 in Fayette County would accumulate $1.59 million in a defined contribution account by the time she retired at 61 – enough to draw the same pension benefit she’d be entitled and have an additional $867,000 left over to beqeath after death:

But the projection was based on assumptions that some call optimistic, including that the teacher’s individual investment account earns 7.5 percent annual returns for 37 years.

Just a week earlier, Bevin criticized the Kentucky Teachers Retirement System for assuming annual returns of 7.5 percent over the long haul, which he called “just ridiculous.”

“Nobody has come close to getting those,” Bevin said during a Greater Louisville Inc. event on Oct. 24. “Last year, yeah – decent year – but overall, anything north of 6 percent is being a little bit presumptuous.”

McKim noted that the Bevin analysis assumes the teacher elects to put in the full 12 percent of salary contribution to the plan from the beginning, whereas teachers currently contribute about 9 percent to pensions today.

It’s “unrealistic” that early-career teachers will be able to save that much, McKim said, given ballooning student loan debts and the expectation that they go on to earn a master’s degree.

In shifting to 401(k)-style accounts, the most significant change is that the worker bears the risk of losing their retirement savings in a market downturn – whereas the state and taxpayers collectively bear that risk with defined-benefit pensions, Lamkin said.

“If we go through a 2008 meltdown, historically, the state was on the hook,” Lamkin said. “Now the employee is.”

To guard against losing their nest egg on the eve of retirement, employees can shift their investments into lower-risk categories as they age – but that also means lowering their potential returns.

Chilton told the pension oversight board Thursday that the state’s new plans will provide “professional investment advisers” to help employees allocate their retirement savings.

At the meeting, state Sen. Chris McDaniel, a Republican from Taylor Mill in northern Kentucky, suggested employees would be better off leaving their savings to “someone who is trained and experienced” instead of “138 politicians,” a reference to the state legislature.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.