Sequence Of Returns

How does sequence of returns risk affect my retirement withdrawals?

Sequence of returns risk occurs when market downturns happen early in your retirement, forcing you to sell investments at low prices to fund withdrawals. This can permanently reduce your portfolio's ability to recover, even if markets bounce back later. The timing of returns matters more than average returns when you're taking regular distributions. Poor early returns combined with ongoing withdrawals create a mathematical disadvantage that good later returns may not overcome.