[SeeSac]

If that person took 12% of their income and invested it in something yielding 5% (compounded quarterly), and did so from the age of 25 to 65, they would have over $300,000. If that same person lived to be 85, they would have enough money to draw $2100 per month for 20 years.

In order to make comparisons, you need to bring the $300k back to present value which would make it about $120k then amoratize the $120k over the expected lifetime of withdrawals and the dude is lucking to get $600 a month (present value) and then if he lives longer his payments end.

[Hoodat]

No, those figures were in real dollars - not nominal dollars. The 5% return is 5% above the rate of inflation. This individual will not be making $10/hr for forty years without getting a raise.