10/08/2026
One of the biggest changes in retirement isn't necessarily how much money you have invested. It's how you're using that money.
During your working years, you're typically contributing to your investments, giving them time to recover from market downturns.
But once you retire, the situation changes.
You're often withdrawing money from those same investments to cover living expenses.
This introduces something called Sequence of Returns Risk.
Here's a simple example:
Imagine two retirees who both start with $1 million and earn the exact same average investment return over 20 years.
One experiences strong market returns early in retirement, while the other experiences significant losses in the first few years.
Even though their average returns are identical, the retiree who experiences losses early could run out of money much sooner.
Why?
Because withdrawing money during a market downturn means selling more shares to generate the same income. Those shares are no longer invested when the market eventually recovers.
This is why retirement planning involves more than simply maximizing investment returns.
Managing volatility, planning withdrawals, and maintaining appropriate sources of income can be just as important as long-term growth.
The goal isn't necessarily to earn the highest return every year. It's to create a retirement strategy that can withstand both good markets and bad ones.
