Sequence-Risk Stress Test

Two retirees, identical returns, identical average — one just meets the bad decade first. Watch what that alone does. Educational only.

Starting portfolioFirst-year withdrawal rate (%)Rises with inflation each year after.Return in the bad decade (%)Applied to the first 10 years, or the last 10.Return in the other 20 years (%)Inflation (%)

Both retirees earn the same 4.3% average return over 30 years.

Meeting the bad decade first costs $909,828.

Same returns. Same average. Only the order changed.

Bad decade first — ends with

Good decade first — ends with

$909,828

The unlucky retiree runs out in year 18. The lucky one, on exactly the same returns, does not. Nothing separates them but timing — which is the one thing neither of them controls.

Why the order matters at all. Compounding is commutative — set the withdrawal rate to 0 above and the two lines land on exactly the same number. What breaks the symmetry is selling. Money taken out during a downturn is gone for good and cannot take part in the recovery, and every withdrawal in a bad early year comes from a shrinking base. That is why the first decade of retirement carries more weight than the twenty years after it.

What actually helps. A cash or bond buffer to spend from instead of selling; a smaller first-year withdrawal; the willingness to trim spending after a bad year; part-time income; and delaying Social Security so more of your spending comes from guaranteed income. Flexibility is the lever — the static withdrawal rate is really just the price of refusing to adjust.

A deliberately simple illustration, not a forecast: it uses one bad decade and one good period rather than real market history or a Monte Carlo run, and ignores taxes and fees. It is built to show why order matters, not to predict your portfolio. Educational only, not financial advice.

Numbers behind this result

Open the exact public record for the legal figure or modeling convention used above.

Sources and notes

Retirement Savings: Choosing a Withdrawal Rate That Is SustainableAAII Journal
The Dynamic Implications of Sequence Risk on a Distribution PortfolioFrank & Blanchett, Journal of Financial Planning (June 2010)
What's a Safe Retirement Withdrawal Rate in 2026?Morningstar, State of Retirement Income (2025 edition)

These tools use simplified assumptions. Use them to frame better questions, then verify details against primary sources or a qualified professional.