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Seems to me that many times (certain in my case), most of one's portfolio may come from sources other than 401K or IRA. In such a case, the portfolio is constantly generating taxable income (like dividends). So, the dividends, which are an important piece of the growth of the portfolio, are often used to pay their own taxes. This reduces the growth rate of the portfolio, but 'ya gotta pay the taxes'.

So, once I start drawing my 6% out of the portfolio, this 6% must pay tax on the 6%, plus any tax required on the taxable income generated by the portfolio? Say you take out $100,000 a year from your portfolio. You would pay maybe $25,000 in taxes on the $100,000. Then, maybe your portfolio generates another $50,000 in taxable dividends or other events. In that case, you would pay maybe $20,000 in taxes on that $50,000.

So, you have a total tax bill of $45,000. Suddenly, your $100,000 is now $55,000. I can really see that I would want the portfolio to pay its own taxes (the tax on the extra $50,000).

It seems that this is a common enough question that some analyst would have already included some treatment of taxes in building the set of tables used to determine the 'safe' withdrawl amount. Maybe I can do that if I eventually learn enough about this stuff.

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