John has just retired with an investment portfolio equal to $1 million. He plans on using the 4% capital balance approach to retirement distributions. He also plans on distributing the amount in one lump sum at the beginning of the year. His first year, he distributes $40,000 to live on, in addition to his other income. However, the market takes a significant decline and his portfolio loses 20%. His second year, after he takes his distribution, his portfolio takes another decline of 20%. How much can he take in the third year if he is sticking with the 4% method? Round to the nearest thousand

$40,000.
$32,000.
$26,000.
$24,000.

Answer rating: 100% (QA)

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