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Jims440 posted:
"I plan to retire at 55 with a 401K worth approx. 1.2 million, all in equities. I have significant other income, but would like to count on 6 - 7% per year from my 401K. I have been a buy and keep investor in the market for many years and have little knowledge of other types of investments. How can I get this type of income from my 401K without drawing down the principle too much? I understand there may be early withdrawal penalties involved."

I hope to retire when I am 56. One thing that may make you smile is that if you quit the firm that holds the 401K after you turn 55, you can take distribution(s)from the 401K without penalty - you will have to pay income tax. This assume that the plan holder will cooperate. There are limitation on withdrawals that are placed on ex-employees by the planholder.

I plan on also needing 6 or 7% when I am 56 but 6 or 7% will equate to 120% of my present income or at 56 very close to 100% of my 2005 income. I have been preparing for a 3% inflation so overall the years I am living my investments need to return 10% or more.

I am not yet into much individual stock investing like the FF4 or RP4 or whatever. For me, the major investing vehicle is some sort of Index Fund. I am also prepared to not increase my living allowance in those years the fund doe not exceed 10%.

This is higher risk approach but I think it will work for me. Thats may be more hope than ability.


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