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Section 3
Sequence of Returns
During the “accumulation years” of investing for retirement,
the sequence of returns has less of an impact on your long-
term goals. It’s really your overall return that matters. However,
once you begin withdrawing money from your investment, the
sequence of returns can dramatically impact how long your
savings may last.
Consider the case of two individuals retiring at different
times, and how the market’s returns, when combined with their
withdrawals, impacted the value of their retirement savings and
how long their savings may last.
A Tale of Two Investors
Two investors begin their retirements with $1 million, and start
making $50,000 annual withdrawals. Both accounts earn a 3.7%
average annual rate of return over a 10-year period. Despite
the initial similarities, these investors experienced significantly
different results.
Chapter 5: Things That Can Wreck Your Retirement
