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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Re: 4% Withdrawal Date: 10/12/1999 7:05 PM
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The generally accepted withdrawals (and one should spent some time at www.scottburns.com) depends upon the length of time you will withdraw over, but the 4% number is starting year one, you can take 4% of the value of your portfolio, inflation adjusted, each year. Thus, if you have 1 million, you can take 4% year one. Next year 4% (or $40,000) plus the inflation, say 3%, or another $120, for a total of 40,120.

The 5% number is a variable number, meaning you can take 5% of the value of your portfolio each year. Thus, year one, you take 5% of 1 million, or $50,000. Next year, you take 5% of whatever your portfolio is worth. If it goes up wildly, great, you get more money. However, if it goes down, you get less.

That is the risk/reward.

Lots of good info on withdrawal rates at www.scottburns.com. One should become familiar with the Trinity study and others to feel comfortable with this.
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