Sequence of Returns Risk
✓ Last verified 14 Sep 2026
The short version
Sequence of returns risk is the danger of experiencing poor investment returns in the early years of retirement withdrawals specifically - even if long-term average returns are fine, a bad start while you're also withdrawing money can permanently damage how long a corpus lasts.
Two retirees with identical average returns over 20 years can end up with very different outcomes purely based on when the bad years happened. A market downturn in the first few years of retirement, while withdrawals are simultaneously depleting the corpus, does far more lasting damage than the same downturn occurring in year 15 - there's less capital left to recover once the bad sequence has already combined with ongoing withdrawals. This is one of the key reasons a more conservative withdrawal rate (see our safe withdrawal strategy article) matters more in retirement than during the accumulation years, when a downturn just means waiting it out with no withdrawals happening simultaneously.
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