Q: My 401(k) portfolio contains a 90/10 mix of stocks to bonds. But in about 10 years, I’d like to drop to a 60/40 ratio and start taking an annual income. How do I go about doing that without incurring a lot of risk? Would a 5% annual withdrawal on a $1 million account safely yield $50,000 of income? I want to leave the principal intact for my children.

Ric: My book The Truth About Retirement Plans and IRAs deals with this very question. A third of the book is devoted to helping retirees generate income. So I’m happy to explain it for you here.

As you noted, you will want to reduce your risk when you’re ready to generate income from your portfolio. After you lower your stock/bond ratio, reinvest all distributions produced by the portfolio just as you do now.

Then, set up what I call a Systematic Withdrawal Plan, as we frequently do for our clients. The book tells you how to do it on your own. You’ll arrange to receive a monthly income pro rata from the entire portfolio. So if you have a 60/40 mix, 60% of the income will come from the stocks and 40% from the bonds.

If there is fluctuation in the account because of market volatility, you’ll rebalance periodically to restore the ratio so you can continue to generate the income.

Thus, the real question is: What percentage of the portfolio should you take in annual income?

This topic is hotly debated among financial planners. You might have heard of the “4% rule,” but we find such rules of thumb to be rather worthless. The correct answer depends on the size of your portfolio, your income requirement, your life expectancy and your attitude about inheritances (the more you want to leave to others, the less you can withdraw for yourself ).

Taking $50,000 a year from a $1 million account, as you said you wanted to do, is a 5% withdraw rate. This figure doesn’t consider inflation; $50,000 won’t go as far in 10 years as it does now. And this assumes you’ll die with the $1 million intact. See how it can get complicated?

This is why I recommend that you engage in the financial planning process. We want to consider all these factors, because obviously you don’t want to outlive your money.