The correct answer is D. Ratio . According to the Investment Funds in Canada curriculum, a ratio systematic withdrawal plan determines withdrawals as a fixed percentage of the portfolio’s value , recalculated each year. As a result, the dollar amount withdrawn varies annually based on market performance and the remaining account balance.
The withdrawal amounts shown in the table decline over time as the portfolio value decreases, which is consistent with a ratio-based approach. Under this method, when the portfolio experiences negative or modest growth, withdrawals naturally fall because they are calculated as a percentage of the current value. Conversely, in stronger market years, withdrawals would increase.
This differs from a constant withdrawal plan , where the same dollar amount is withdrawn each year regardless of portfolio performance. It also differs from a variable plan , which adjusts withdrawals based on income needs rather than a formula, and a lifetime plan , which is structured to provide income for life based on actuarial assumptions.
The CIFC text emphasizes that ratio plans help reduce the risk of premature depletion of capital, as withdrawals automatically adjust downward during poor market conditions. However, income certainty is lower because payments fluctuate.
Because the withdrawals change each year in proportion to the portfolio’s value, the investor is clearly using a ratio systematic withdrawal plan , making Option D the correct and fully CIFC-verified answer.
