It has been a question for as long as people have thought about retirement: How much can one withdraw from his or her portfolio each year without running out of money in retirement?

With short-term interest rates near 0%, it is enticing to buy high yielding dividend stocks and just sit back and watch the dividend checks roll in. But it is very important that investors understand that when times get tough, companies that can’t afford their dividend any more will cut it; and some will slash their dividends immensely.

According to the Social Security and Medicare Boards of Trustees, the Social Security fund will be exhausted in 2036. Because there will still be money coming into the fund via payroll taxes and interest from treasury bonds, this doesn’t mean that all Social Security payments will be stopped in 2036. But it does mean that benefits would have to be cut to keep the fund solvent. Given current forecasts, Social Security payments would have to be cut by 25% across the board in 2036 in order to keep the fund from going bankrupt.