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"From what I understand, you have been taking 4% of the 2000 year value all this time?"

Actually I've taken what I needed to live comfortably. During the first 8 years I had only investment income so I drew, on average, 5%. The plan was to reduce withdrawals to 3% beginning this year when SS would cover about 40% of my needs. Over time the lower withdrawals would make up for the larger ones in the early year. I actually took only 2.85% this year.

My annual income needs haven't changed much with the exception of health insurance, which seems to go up about 14% every year. I don't expect to take anymore from investments in 2009 than I did in 2008. It's just that with my portfolio down so much the percentage will be back up around 4%. In dollar terms I'll need less from investments than I took in my first year of retirement.

I have two things which will help me in the next few years. First, in less than 2 years I'll go on Medicare. Not only will the premiums for Medicare, a supplement, and drug coverage be significantly lower than what I now pay for private insurance, but my risk of large out-of-pocket expenses will drop sharply. And in 4 years I'll pay off a small low-interest mortgage which will cut my cash needs by $3000.
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