See how market timing can make or break your retirement—even with identical average returns
Good returns early, bad returns late
Historical sequence of returns
Bad returns early, good returns late
Based on your inputs, the probability of your money lasting until age 95 is:
*Based on 1,000 simulated market scenarios using historical volatility
This calculator uses simplified assumptions. A financial advisor can model your exact situation and build a personalized strategy.
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Understanding the math behind sequence of returns risk
We simulate three different retirees: Lucky Larry, Average Anna, and Unlucky Uma. Each with identical 7% average annual returns over 30 years. The only difference? The order of those returns.
Each year, we withdraw your specified amount (with optional 3% inflation adjustments). This is where sequence risk becomes brutal:
Year 1: Market drops 15%
$1,000,000 → $850,000
Withdraw $40,000 → $810,000
You sold stocks at a loss. They can never recover for you.
Year 1: Market gains 15%
$1,000,000 → $1,150,000
Withdraw $40,000 → $1,110,000
You're selling winners. Your base stays strong.
Our calculator highlights returns in years 1-5 because research shows this is the danger zone. Poor returns here can doom your retirement, even if markets soar later.
🎯 Key Insight: The first five years of retirement matter more than the next 25 combined when it comes to portfolio survival.
Beyond our three scenarios, we run 1,000 simulations with randomized returns based on your stock allocation's historical volatility. This gives you a probability - your "success rate."
Distribution of 1,000 outcomes
72% success rate means in 720 of 1,000 scenarios, your money lasted to your target age. In 280 scenarios, you ran out early.
We show you exactly how to protect yourself from sequence risk with strategies used by professional financial planners:
Return Sequences: Lucky Larry front-loads returns (avg +12.4% in years 1-5), Unlucky Uma back-loads them (avg -8.2% in years 1-5), while Average Anna uses blended historical sequences. All three achieve the same compound average annual return over 30 years.
Monte Carlo Simulation: Generates 1,000 scenarios using your expected return and a volatility factor based on stock allocation (15% base volatility for 100% stocks, 5% for 0% stocks). Returns are normally distributed with mean = expected return.
Inflation Adjustment: When enabled, withdrawals increase 3% annually, compounding the sequence risk effect.
Historical Data: Average Anna's sequence uses a blend of post-1926 U.S. stock/bond returns adjusted to your target average.
How retiring in January 2008 vs January 2009 changed everything
Margaret and Robert had identical portfolios, identical withdrawal rates, and earned similar average returns over their lifetimes. The only difference? Margaret retired 12 months earlier—right before the 2008 financial crisis.
That single year of bad timing cost her 12+ years of retirement security. She was forced to sell stocks at a 37% loss in year one, permanently reducing her portfolio's ability to recover. Robert, by pure luck of timing, avoided selling during the crash and caught the entire 2009-2019 bull market with his full portfolio intact.
This is sequence of returns risk in action—and it's why retirement timing matters more than most people realize.
Watch how identical $1M portfolios with 4% withdrawals diverge based on one year of timing difference
Margaret did nothing wrong. She had a solid plan, reasonable withdrawal rate, and diversified portfolio. She just had catastrophically bad luck with timing.
While you can't predict markets, you can build defenses: cash buffers, flexible spending, delayed retirement if markets crash, and working with advisors who understand sequence risk.
Both Margaret and Robert experienced the same market volatility over 15+ years. The difference was the order of returns in years 1-5. Protect those years at all costs.
Financial calculators that show "7% average returns = success" are dangerously misleading. Margaret likely saw those projections too. Sequence matters more than averages.
Use our calculator above to stress-test your portfolio against bad timing scenarios - then find advisors who can help you build sequence risk protection.