If there were a Hero Award in financial planning, William P. Bengen would be a shoo-in for nomination. The southern California Certified Financial Planner does more than financial planning for his clients. He also does original research that is more important to you and me than the vast majority of the investment research from Wall Street.

How can this be?

Simple. While Wall Street concentrates on accumulating money through investment returns, Mr. Bengen is one of the leaders in distribution research, the arcane study of portfolio survival when we are taking money from our nest egg rather than adding new savings.

His research, published 12 years ago in the Journal of Financial Planning, warned about the dangers of taking much more than 4 percent a year from a retirement portfolio.

His more recent research, published 5 years ago in the same journal, told us we could safely withdraw 5 percent a year by establishing a "floor and ceiling" rule for distributions in bull and bear markets.

Now, in the August issue of the Journal of Financial Planning, Mr. Bengen advances the subject again, outlining a conceptual "layer cake" for retirement income planning. With it, a series of decisions may increase (or decrease) your initial withdrawal rate. While most will remain in the 4 to 5 percent range, he shows that a retiree willing to assume significant risk might have a starting withdrawal rate of a whopping 7.62 per cent.

We're talking, in other words, of nearly doubling retiree spending.

More champagne, anyone?

Since you can get 5 percent yields on long term bonds, some readers may wonder, why should anyone even worry about this?

Answer: We need to worry because a 5 percent constant yield is a commitment to declining purchasing power. A couple in their sixties can expect that one of them will live about 25 years. If inflation averages 3 percent, a $500,000 nest egg invested in 5 percent Treasurys will see its original $25,000 of annual purchasing power reduced to $18,600 in 10 years and only $11,940 in 25 years.

To have risk-free retirement purchasing power of $25,000 for the remainder of your life, you would need to invest your nest egg in Treasury Inflation Protected Securities, currently earning about 2.3 percent over the rate of inflation. That, in turn, would require a nest-egg of $1,087,000. That's a lot more than the $625,000 to $500,000 you'd need for a portfolio that allowed a 4 percent to 5 percent withdrawal rate with limited risk. And it's way more than the $328,000 you would need for a 7.62 percent withdrawal rate.

Mr. Bengen's layer cake is based on 7 decisions about your retirement. Here is a nutshell description of the five most important ones:

Your "withdrawal scheme." This is how you plan to withdraw money. These plans range from a "lifestyle scheme" that assumes you want to sustain a given spending level for the rest of your life, to a "life-phase" scheme that recognizes that future needs may be smaller than current needs, to an "annuity-like" scheme that simply delivers an income that is never adjusted for inflation.

Your asset allocation. How your portfolio is invested will have an impact on your long term returns.

Your time horizon. If you come from a long-lived family, you might want to consider a 35 year horizon. A person who already had a number of ailments, however, might feel safe planning on a 20 year horizon.

Your success rate. Each portfolio and withdrawal scheme has a success rate that depends on your time horizon. If you insist on 100 percent success, you'll need to withdraw at a lower rate than if you would be willing to accept a 90 percent success rate.

Your desire to leave a legacy. Your desire to leave a certain amount to children or charities will also have an impact on your possible withdrawal rate.

How often the portfolio is rebalanced and whether you assume above average or below average investment performance also have an impact on your withdrawal rate.

Sound complicated?

It is. That's why you'll hear a lot more about spending 4 to 5 percent. But if you and your financial planner are willing to do the work, your nest egg may start looking a whole lot better.