According to the widely known Trinity Study and many Monte Carlo simulations, to have a high-level of assurance of not out-living their money, retirees should expect to withdraw around 4% of their initial invested account a year (the answers are divided by 12 months). Some experts say it’s should be closer to 2% ($166 a month), others say as much as 5% ($416 a month)…and some say the percent should vary depending on various conditions.

A simple calculation helps reinforce the 4% result: divide $100,000 by 25 years (living from age 65 to 90) – that’s $4,000 – divided by 12 months equals $333 worth of monthly income (assuming the investment performance and inflation are the same…much like a bank savings account). But at the end of 25 years, the account is $0. Yes, annuities may provide larger amounts…but with some drawbacks.

Isn’t this something employees should find out in their 20s and 30s – not when they reach retirement age?

Many employees in their 60s today will retire with less than $100,000 in their retirement accounts.