Americans still haven’t figured out how to make their retirement money last.

A survey that compared workers’ understanding from 10 years ago of how much they could safely withdraw from their retirement nest eggs without running out of money, versus how much today’s workers believe is a safe percentage, has revealed that while participants are improving, they’re still a long way from knowing what that safe income level is.

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The survey, released by Ipsos Public Affairs, found that 77 percent of Americans over the age of 40 do not know how much of their retirement savings they can safely spend each year without running the risk of outliving their assets.

In 2006, before the Great Recession, 90 percent of Americans did not know a safe withdrawal rate, and believed that 10 percent was acceptable. Now 23 percent of respondents realize they should keep withdrawals to below five percent of their retirement savings per year.

In general, experts say that typical participants shouldn’t take more than 4 percent per year from their retirement plans. But that doesn’t mean that those participants are aware of that; 19 percent of respondents said they didn’t know how much to withdraw each year from their retirement savings to avoid running out of money during retirement.

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And 31 percent of all respondents actually think they can get away with spending 10 percent—or even more—of their savings each year. Historic investment returns would predict that, at that rate, retirees risk running out of money in about 11 years or less. And that’s a lot shorter period than their projected lifespans during retirement.

The good news is that people are trying to figure out ways to turn their savings into lifetime income, with 58 percent expressing that interest. Ten years ago, only 25 percent said they were interested in doing so.

Instant Insights /

Safe withdrawal rates from retirement plans still unclear

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