📉 Sequence of Returns Risk

Why the ORDER of returns matters more than the AVERAGE

⚠️ Important Legal Notice
  • Simulation Only: Monte Carlo simulations show possible scenarios, not predictions of actual outcomes.
  • Historical Data: Past market behavior does not guarantee future patterns.
  • Not Investment Advice: This educational tool should not replace professional retirement planning.
Sequence of returns risk is real. Work with a financial advisor for retirement planning.
🌅 Good Years First
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Lasts X years
🌧️ Bad Years First
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Lasts X years
Same average return, but difference of
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Portfolio Value Over Time
⚠️ The Sequence Risk Problem

Early retirement withdrawals during a market downturn permanently damage your portfolio. You sell more shares at low prices, leaving fewer to benefit from recovery. This is why retirees with the same average returns can have vastly different outcomes.

📋 Assumptions Used v1.0
  • Volatile scenario: Returns of -15%, +25%, -10%, +30%, +8%, +15%, -5%, +20%, +12%, +10% (repeating)
  • Steady scenario: Consistent 10% returns each year
  • Withdrawal timing: Beginning of year (worst case)
  • No inflation adjustment: on withdrawals

Data verified: January 2026

🧮 How This Calculator Works

Each year: Portfolio = (Previous Balance - Withdrawal) × (1 + Return)

The "Good First" scenario runs returns in order, "Bad First" reverses the sequence.