Pat retired in 2007 with $865,000 in his 401(k). His plan was to withdraw 4% of his account. In 2008, his account lost 30%. Assuming he was able to stick to the 4%, withdrawal what did his annual income decline by? In addition, what risk does this question illustrate best?
a. Pat is still taking 4% no decline, which illustrates default risk.
b. Pat is still taking 4% no decline, which illustrates sequence of return risk.
c. Pat's withdrawal declined by $10,380, which illustrates sequence of return risk.
d. Pat's withdrawal declined by $10,380, which illustrates unsystematic risk.
