By Sandra Block
From Kiplinger’s Personal Finance
One of the most perplexing questions facing retirees is this: How much can I withdraw from my savings each year without running out of money?
For many, the answer has been to use the 4 percent rule, developed by William Bengen, an MIT graduate in aeronautics and astronautics who later became a certified financial planner.
Here’s how it works: In the first year of retirement, withdraw 4 percent from your IRAs, 401(k)s and other tax-deferred accounts (which is where most workers hold their retirement savings). For every year after that, increase the dollar amount of your annual withdrawal by the previous year’s inflation rate. For example, if you have a $1 million nest egg, you would withdraw $40,000 the first year of retirement. If inflation that year is 2 percent, in the second year of retirement you would boost your withdrawal to $40,800….