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I just completed reading the "Stay Foolishly Retired" article. I'm wondering how people pay the taxes on the income generated from their portfolio when they are withdrawing some regular amount (like 6%). Do they pay the tax on the entire portfolio income from the 6% they withdraw? Do they pay tax on the 6% from the 6%, and then let the portfolio pay the tax on it's own earnings? Do they count the amount paid in tax by the portfolio to be part of the yearly 6% withdrawl amount?

I just have a hard time trying to decide how to pay the tax. I currently pay the taxes on my portfolio with income from my current employment. I look upon that as a little extra "savings" contribution to the portfolio. But, when I retire and want to draw from the portfolio, I won't have any other income to use for taxes. So, if I start drawing 6% from the portfolio, am I drawing out pretax money or aftertax money?

Shucks, it shouldn't be so hard to retire.


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