Sequence of Returns Risk

See how the timing — not just the average — of returns affects a portfolio in retirement.

Read the guide: Retirement Planning

Starting Portfolio

Initial Annual Withdrawal

4.0% withdrawal rate

Inflation Rate (%)

Years in Retirement

Use dynamic spending rules

Skip the inflation raise in any year the portfolio is below its starting value, to help preserve capital.

The danger of early crashes

The Poor Start and Great Start paths use the identical set of returns (same 7% average) — only the order differs. Because withdrawals happen during the early downturn, the Poor Start portfolio survives but ends far lower.

Great Start — Final Balance

US$2,194,469

Poor Start — Final Balance

US$433,343

Portfolio Balance Over Time

Great Start
Poor Start
Steady Average

Illustrative fixed return path (not your actual market). The lesson is the gap between the two lines despite an identical average — that gap is sequence-of-returns risk.