Sequence-of-Returns Risk Explained

Executive summary

Sequence-of-returns risk is the danger of poor market performance early in retirement permanently damaging the plan. It dominates the first 10 retirement years.

• First 10 years matter more than the last 20
• Two identical-return decades can produce wildly different outcomes
• Hold 3+ years of spending outside equities

Key takeaways

• First 10 years matter more than the last 20
• Two identical-return decades can produce wildly different outcomes
• Hold 3+ years of spending outside equities
• Rebalance into weakness, not strength

Key strategies

1. Strategy 1

   First 10 years matter more than the last 20

2. Strategy 2

   Two identical-return decades can produce wildly different outcomes

3. Strategy 3

   Hold 3+ years of spending outside equities

4. Strategy 4

   Rebalance into weakness, not strength

Pro-tips checklist

• Bond glidepath rising into retirement
• Plan flexibility on the discretionary line

FAQ