Retirement Planning Advice - How Much Can I Take Out of My IRA?

As long as you limit your withdrawals to the amount of interest, dividends and capital gains generated, you won’t have to touch your principal and the value of your account won’t decrease. For example, let’s assume you have a $400,000 account value and by the end of the year your balance has increased to $425,000. If you only take out $25,000, your principal will remain intact.

For most people however, limiting their withdrawals to only interest, dividends or capital gains isn’t realistic because most people don’t hold investments that only go up in value. In short, their portfolios rise and fall in value with the normal stock and bond market fluctuations and could be worth more or less than their original investments. Additionally, most people won’t have a pension so they’ll have to rely heavily on an income stream from their portfolio. In many cases, their IRA portfolios are scheduled to be depleted over time.