First, how do taxes come into the equation? Do you assume that you are paying taxes due on investment income/cap. gains out of the 4 percent withdrawn, or out of the accounts themselves (i.e., is this factored into the return on the investments themselves)?

Second, I had read somewhere that you could potentially increase the safe withdrawal rate (maybe to around 4.8 percent) by devoting more of your portfolio to inflation protected instruments (TIPS?). Is that considered to be accurate, particularly with interest rates on such bonds at a lower level? (I understand that, in any event, this strategy would reduce the expected value of your portfolio at the end of the period).

Finally, it would be interesting to get an intuitive feel for how the safe withdrawal rate works in a simplified example that controlled for inflation, e.g., through a TIPS type portfolio, and limited risk. Does anyone have a sense for what a safe withdrawal rate would be if, for example, you were 100 percent invested in TIPS at current interest rates?

Thanks for any help.