Retirement Investing

Sequence-of-Returns Risk

Definition

What is Sequence-of-Returns Risk?

The risk that poor returns early in a withdrawal period cause lasting portfolio damage.

Example in practice

A market crash in the first retirement year forces sales at depressed prices.

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Annual portfolio withdrawals divided by the portfolio's starting or current value.

An estimated withdrawal rate intended to support spending over a long retirement under stated assumptions.

An account or arrangement designed to accumulate and invest money for retirement.

The property, investments, rights, and obligations left by a person at death.

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