The Hidden Risk That Can Derail Your Retirement
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Estimated Read Time 4 Minutes
The “sequence of returns”, the order in which markets rise or fall, can make or break your retirement income.
Two people can earn the same average return but end up in totally different places. Here’s how to protect your wealthspan when it matters most.
What if you did everything right… and still ran out of money?
You saved. You invested. You planned.
But then the markets turned.
It’s not the average return that hurts you, it’s when the bad years show up.
That’s the hidden danger called the sequence of returns.
Why do some retirees thrive while others struggle?
Here’s the paradox: Two people can earn the exact same average return, but one enjoys decades of freedom, while the other runs out of money early.
BlackRock modeled it. Both portfolios started at $1 million, both averaged 7% over 35 years. One grew to $1.1 million; the other went to zero. The only difference?
The order of returns.
Strong early years create cushion. Weak early years drain it.
During accumulation, volatility is just noise. But during retirement when you’re withdrawing income it becomes a storm.
The big insight: It’s not just returns, it’s timing.
David Blanchett, Ph.D., CFP®, CFA, Head of Retirement Research at PGIM, calls this “sequence risk.”
He found that early negative returns in retirement can permanently reduce a portfolio’s ability to recover, even if the long-term average looks fine.
In his words, “Two retirees can earn the same average return yet end up in completely different places because one happened to retire into a bull market and the other into a bear.”
Translation: Luck matters. But planning matters more.
How do you protect your wealthspan from sequence risk?
It starts with flexibility.
Instead of a fixed withdrawal rule, use a dynamic strategy that adjusts with markets.
Instead of chasing growth, use diversified income sources, interest, dividends, annuities, part-time income.
Instead of reacting, plan for volatility before it hits.
At Longevity Wealth Strategies, we call this designing your Wealthspan Plan a framework that helps your money last as long as you do, without sacrificing purpose or peace of mind.
What this means for your freedom
Retirement isn’t an end. It’s a transition from earning to enjoying.
But freedom fades fast if your portfolio isn’t built to handle the unexpected.
That’s why understanding the sequence of returns isn’t just about math.
It’s about control.
It’s about ensuring your wealth supports the life you’ve worked so hard to create, no matter what the markets deliver.
Wealth that lasts.
Your wealthspan is the number of years you can live with freedom, health, and purpose supported by the right strategy.
Markets will move. That’s inevitable. But clarity creates confidence. And confidence opens the door to opportunity.
Start your next chapter. Schedule your Wealthspan Review today.
Your Next Step
Schedule Your Wealthspan Review™Disclaimer: The information provided is for educational purposes only and does not constitute investment, tax, or financial advice. Consult with a licensed professional before making financial decisions.
Sources
BlackRock, “Will My Income Last My Retirement,” Hypothetical illustration based on 7% average annual return over 25–35 years.
David M. Blanchett, D. (2022). Redefining the Optimal Retirement Income Strategy. Financial Analysts Journal, 79(1), 5–16. https://doi.org/10.1080/0015198X.2022.2129947
