SS16 - R45 EOC #3A - taxed expenses?

Can anybody explain the “return requirement” component of this question? The text says that Wisman and her new husband want their portfolio to cover their living expenses at retirement, which they estimate will be $400,000. The EOC answer for 3A shows this $400,000 before and after tax as part of calculating the spending rate. How can retirement expenses be taxed? … It’s not income. What am I missing? Thanks in advance

I think it’s an extraneous calculation, probably just to emphasize they’re going from post- to pre-tax. i.e. pre-tax return’s a bigger number. From an accounting perspective, it doesn’t make sense to have AT expenses - there’s no tax basis for them obviously, which is your point. I checked the errata, and this wasn’t there… so, if it’s in the readings, I guess they could give an after-tax expense amount? Probably would trip up everyone on test day.

You are taxing the returns on the portfolio… 6.47%.