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The ladder can be in bonds (that mature in each year you might need them) or CDs....with the first years living money in a MMF or equivalent.....

The ladder has to contain the minimum mount above what you already get...if you get $5000/yr from somewhere esle, and need $30,000, then the ladder only has to contain $25,000/yr. If you are going to get SS, or get a small pension, then that counts. The ladder has to be above and beyond that.

let us assume your stocks are tax efficient - either index funds or individual stocks, not giving you taxable distributions each year. Maybe some dividends, and that counts as current income.

Also, the ladder can be based on after tax income.

If you had an 800,000 nest egg, and were planning on taking out 4%, that would be $32,000, but there would be some tax due, either cap gains, or on interest on bonds or CDs (which is why I usually use the CD interest or bond interest and dividends to live on).

Your aftertax income would be somewhat less.

When you are living on your ladder (ie, horrendous year in the market), and don't want to sell any stock that year, the ladder has to provide the after tax amount needed.

Let's just say, you had $28,500 after taxes.....and $5000 income from interest dividends...the ladder only need contain 28,500-5000....well, plus a little more to pay taxes on your interest income.....

Hope that helps....

Yes, and sooner or later, you will have to sell stocks either to rebalance, or to live on...or keep the ladder in place.....

not an easy thing to figure...
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