Q: What are the downsides, if any, to taking interest-only distributions from a retirement plan? I am 63, semiretired, and am able to piece together a nice income with my part-time job, a small pension from a previous employer, and the distribution. I am thrilled to see that my 401 doesn't go down and even grows a bit when the market is flush. … I do pay 20 percent in fed taxes off the top, but since my income will be down considerably this year, it's feasible that I will get something back on my tax return. Is this an OK strategy?

Marta

A: My reaction is you're in a good position. Part of the approach you're taking at the moment has been around for a long time: Live off interest and dividends and leave the principal alone. Another aspect of your strategy is increasingly important for aging boomers: Earning a part-time income during the traditional retirement years (or, as I call it, the unretirement years). The household economics of unretirement are compelling.

For one thing, earning even a slim part-time income allows many people to keep saving or, like you, minimize how much they're taking from retirement savings. You don't mention Social Security, but a paycheck in unretirement makes it practical to delay filing for benefits, a savvy financial move. For the average worker, earning a paycheck for an additional eight years — shifting the age of filing from 62 (the earliest) to 70 years (the latest) — boosts the benefit by two-thirds or more.

However, with the passage of time you might want to adjust your strategy, especially if your semiretirement income goes down. To get a broader perspective I checked in with Jonathan Guyton, a certified financial planner at Cornerstone Wealth Advisors in Edina. Guyton has written a number of well-known articles for his peers on withdrawal strategies in retirement. We ended up having a wide-ranging discussion and I want to focus on one aspect of it for you to think about.

Here's the basic problem we all face with taking money out of retirement savings: We can have a lot of fun spending large amounts of accumulated retirement savings in the early years. The risk is we'll be forced to make dramatic cuts in our lifestyle later on. However, if we watch our pennies too carefully and hoard our savings, the risk is that we'll die with plenty of money and a long list of regrets.

A standard starting place for calculating how much you can take out from retirement savings is the 4 percent rule. The basic idea is you take out 4 percent of your portfolio in the first year; the next year you take out another 4 percent, plus inflation; and so on. One more piece of information: The more your portfolio is invested in fixed income the more conservative your withdrawal strategy. The 4 percent rule is merely a quick and dirty formula, but you have to start your calculations somewhere.

Let's say you want a portfolio 30 percent in equities. A safe withdrawal number to start your calculations is probably 3 percent, says Guyton. A portfolio 50 percent in equities — 4 percent. His twist depends on your willingness to make adjustments in your strategy depending on the economic and financial environment. So, with a 30 percent equity portfolio, you might consider 4 percent and with 50 percent equities 5 percent, but you would cut back the percentages in bad times. "These kinds of adjustments add about 1 percentage point to what you can do," he says. "If you don't want to be flexible, take less out."

My takeaway is that Guyton's perspective adds another layer to consider. But you've got a good approach for now and the time to play with different scenarios so that your strategy can evolve.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is cfarrell@mpr.org