How Sequence-of-returns risk works
Two retirees can earn the same average return but have different outcomes because withdrawals remove units after early losses, leaving less capital for a later recovery.
An example
A 25% fall in the first retirement year while taking withdrawals is harder to recover from than the same fall late in retirement after years of growth.
Why it matters for your family
Near-term spending reserves, flexible withdrawals and a suitable allocation can reduce dependence on selling volatile assets during an early downturn.
Questions people ask
- What does Sequence-of-returns risk mean?
- Sequence-of-returns risk is the danger that poor returns early in a withdrawal period permanently damage how long a portfolio lasts.
- Why does Sequence-of-returns risk matter for a family?
- Near-term spending reserves, flexible withdrawals and a suitable allocation can reduce dependence on selling volatile assets during an early downturn.
- Where can I verify information about Sequence-of-returns risk?
- Start with SEBI Investor, linked on this page, and the current official document for the product or tax year involved.