IMO there is no single answer to your question. It depends on both ones personal circumstance and ones investment style.
In my our case, for example,we need an annual pension of around $75,000. (higher than what may seem normal as we are putting our 2 grandchildren thru private schooling.) Dividends and franking credits come to around $55,000 pa, so leaving around $20,000 to find.
All of the investments are in the share market. The fund is a fairly active investor, typically 120 trades a year. Also rarely keep much cash in the fund, prefer to be fully invested.
Finding this shortfall of around $20,000 pa does not present a problem, because of our frequency of trading.Suppose our cash account outside the fund is getting low, then the next time the fund sells shares to say the value of $50,000, it will reinvest $40,000 and transfer the balance $10,000 out of the fund as a pension.We need to do that twice a year. Have never had to sell shares just to pay ourselves a pension.
