Sequence of Returns Risk: The Retirement Danger No One Talks About

Ron Madey, CFA · 5 min read · April 2026

It's not just about how much your portfolio earns on average — it's about when it earns it. The order of returns matters enormously in retirement.

Why Order Matters

If you experience a severe market downturn in the early years of retirement — while you're taking withdrawals — you permanently reduce your portfolio's ability to recover. You're selling low and locking in losses. The same average return in a different sequence can produce very different outcomes.

How to Manage It

Sequence risk is managed through asset allocation, withdrawal flexibility, maintaining a cash buffer, and tactical income strategies — not by trying to time the market. The goal is to avoid being forced to sell equities during downturns.