Q. I am not wealthy by any means.  My home is paid for.  I receive Social Security and a pension from my former employer, netting about $3,100 a month.  All of my expenses total about $1,800 a month.  I have $162,000 in my 401(k) account.  I am a 67 years old and single. I am in excellent health.  I would like to start taking out 4 percent a year from the 401(k).  Do you think it is too early to do this?  I would like to travel a bit and enjoy my remaining years. —B.M., from Akron, Ohio

A. Start now. As a single man it would be safe to take 4 percent a year from your 401(k) assets starting earlier than 67. Most of the portfolio survival studies, including the original work by financial planner William Bengen, is based on looking for a sustainable inflation-adjusted income from a portfolio that lasts the 25 to 30 year joint life expectancy of a couple. It also assumes they retire a bit earlier, at age 65. Since you are single and 67 your planning horizon is shorter. So a 4 percent withdrawal rate would be relatively conservative for you.

Another positive factor is that you can “front-load” your withdrawals on the assumption that your spending for travel will decline as you get older— or until your waltz and tango moves improve enough that you will be in demand on cruise ships, as older single men are.

Those factors, I believe, offset a growing concern in the planning community that with current yields on stocks and bonds at historically low levels the probability of future portfolio survival will be lower.

Q. My husband and I realize we don’t really know the definition of “withdrawal rate.”  For example, our assets consist of mutual funds:  cash (money market funds), bonds (bond funds), and stocks (stock funds).  They all generate income in the form of dividends and interest, separate from market appreciation/depreciation.  We also have pension and Social Security income. 

We try to plan the next year’s expenditures by adding our expected dividends and interest to our pension and Social Security income. Then we divide the investment income by the value of our assets at the start of the year.  We don’t count market appreciation/depreciation, because that is a total unknown (and we need our assets to appreciate to cover inflation).  We know our withdrawal rate is supposed to be kept below 4 percent.

Of course, the reason we do this is to maximize the chance that our money will last as long as we do.  We’d be delighted if our withdrawal rate was 2 percent, but we spend closer to 4 percent.

Is this the right way to calculate our withdrawal rate? — G. B., Sugar Land, TX

A. The safe withdrawal rate discussion is based on how much you can take from your portfolio as a percentage of the total assets when you start, adjust for inflation each year, and not run out of money over a period of 25 to 30 years— the joint life expectancy of a couple in their mid-60s. So it is a beginning percentage of your nest-egg. It is not related to the dividends and interest produced by the portfolio each year. And it is an amount that you can take regardless of whether the portfolio is up or down for the year.

By restricting yourself to dividend and interest income in the present market you may be sacrificing the present for the sake of the future— you’ll maximize the chances that you have an estate to leave, but you’ll be lowering your standard of living for the remainder of your lives. Most people would rather have it the other way around— maximize their standard of living for the rest of their lives, taking some chance that their estate will be minimal. Research on portfolio survival at different withdrawal rates— such as the studies mentioned above— indicates that a withdrawal rate of 4 to 5 percent has a high probability of long-term survival.

In the current market, with yields on both stocks and bonds at ridiculously low levels, it would probably be better for a couple to err on the low side— 4 percent— than to stretch for a higher withdrawal rate. You can read a lot more about this on my website in the category “The Spender’s Portfolio and Portfolio Survival.”