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I thought this was interesting from Thursday's WSJ


Just as important as having the right asset allocation is making sure you invest enough. Many big-spending boomers are shocked to learn how little of a portfolio financial advisers say they safely can withdraw in the initial years of retirement to avoid running out of money in old age. Many advisers cite computer modeling showing that retirees under the age of 70 risk depleting their nest eggs if they cash out more than 4% annually -- or $40,000 of a $1 million portfolio.

"Two percent is bulletproof, 3% is probably safe, and 4% is the absolute maximum," says William J. Bernstein, an investment adviser in North Bend, Ore. If the $1 million is in a tax-deferred account, such as an Individual Retirement Account or a 401(k), he notes, "you've got to pay taxes on those assets on the way out." So you have roughly $800,000 to work with -- or $32,000 a year maximum to spend.


Dr. Bernstein needs a copy of TurboTax. A married couple taking the standard deduction would only pay $3,365 in Federal taxes assuming the whole $40,000 was taxed as ordinary income. Most retirees would get some of their income from dividends or return of capital that are even taxed at lower rates.

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