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Sequence of returns risk explained

Understand why poor early retirement returns can be more damaging than poor returns later on.

Sequence risk is one of the biggest reasons retirement drawdown planning is more fragile than accumulation planning.

1

Guide section

Why the order of returns matters

When you are still contributing, weak markets can actually help future returns because you are buying at lower prices.

Once you start withdrawing, the opposite can happen. Early losses combined with withdrawals may leave less capital available to recover later.

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Guide section

What to do with that insight

Sequence risk does not mean retirement is impossible. It means that withdrawal plans benefit from margin, flexibility, and scenario testing.

A slightly lower starting withdrawal or more adjustable spending can materially improve resilience.

Bottom line

Where this guide should leave you

The best use of sequence risk is not fear. It is better planning around flexibility, buffers, and realistic income assumptions.

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