old personWhen—and how much—to take each year from your portfolio? In a smart marketwatch.com piece, Kenneth Roberts considers four key issues, beginning with . . .

“1. Life expectancy

“In the case of a married couple who retires at age 65, there is a good chance that one of them will live for more than 30 years in retirement. According to life expectancy tables from the Social Security Administration, a 65-year-old male today has a life expectancy of 17.57 years and a 65-year-old female has a life expectancy of 20.20 years. The average age difference between married couples in the U.S. is about 3.5 years, with the male being typically the older partner. That means that women are likely to spend a few years in widowhood since they are normally younger and live longer.

“2. Rate of return

“You also have to estimate the rate of return you’ll earn on your retirement portfolio. Using historical averages is the most common approach, but you also may want to consider alternative scenarios, like a prolonged bear market in stocks or low interest rates lasting for many years. In a normal interest rate environment, a retiree with $1 million saved could expect to get an income of $45,000 to $50,000 a year by investing in 10-year U.S. Treasury bonds without risking principal if held until maturity. Today, that same million bucks will only get you about $25,000 a year. Of course, U.S. Treasury bonds are backed by the full faith and credit of the U.S. government and are considered to be among the safest investments in the world.”

Up next: Inflation and goals.