Tell me more about the 6% per annum withdrawal plan from investments during retirement.?

The idea is this. Over the long term equity investments should grow at about 10% per year. Inflation over the long term less than 4%. So once you have saved enough money to retire, say a million and a half, you can withdraw 6% per year from that amount and still keep up with inflation and never run out of money no matter how long you or your wife manage to stay around. Then when you die, you still leave the million and a half to your kids or whoever. That is the theory.

Of course how well the theory works depends on how well you have invested. It does assume that you have made good investments and not dumped all your money into World Com or Enron.

I'd suggest you keep your distributions under 5% (4% would be even better). There are a number of studies that suggest the 4% amount has a higher degree of success.

I'd especially keep it lower in the first few years of retirement. A big loss early on can be very difficult to overcome if you are withdrawing a high %.

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