Sequence of returns risk is one of the most important — and often overlooked — risks for investors approaching or entering retirement. Understanding how the timing of market gains and losses impacts your withdrawals can make a significant difference in how long your assets last.
- 00:04Introduction to retirement nest egg duration
- 00:12Defining sequence of returns
- 00:24Example setup: $500,000 retirement fund
- 00:40First scenario: Starting with positive returns
- 01:01Result: 34 years of income
- 01:08Second scenario: Starting with negative returns
- 01:41Impact: Loss of 11 years of retirement income
- 02:08Solutions for managing sequence of returns risk