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Retirement Risks Cornerstone Guide

Understanding Sequence of Returns Risk

Two retirees with the same average return can get very different outcomes — all because of the order those returns arrive.

Updated June 8, 2026 8 min readRetirement Risks
Original infographic in development: Understanding Sequence of Returns Risk

Sequence-of-returns risk is the danger that poor investment returns early in retirement — when you're also withdrawing money — do lasting damage to your plan.

This guide explains the concept with plain examples and the strategies used to manage it.

What sequence-of-returns risk is

Chart: same average return, different outcomes

Why the order of returns matters once you're withdrawing money.

Why early losses are so dangerous

How withdrawing during a downturn locks in losses you can't recover from.

The first five years matter most

Why the period right around retirement carries outsized risk.

Managing the risk

Reserves, flexible spending, and guaranteed income to reduce reliance on volatile assets.

This guide is for general educational purposes only and is not financial, tax, or legal advice. Tim Hartle is an independent insurance professional. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company and are not FDIC insured. Rules and product features vary by situation and by state. Please consult a qualified advisor about your own circumstances.

Frequently Asked

What is sequence-of-returns risk in simple terms?

It's the risk that bad returns early in retirement, combined with withdrawals, permanently reduce how long your money lasts — even if average returns are fine.

Why does the order of returns matter?

When you're withdrawing money, losses early on shrink the base that future growth has to work with, so you can't fully recover the way you could while still saving.

How do I reduce this risk?

Holding reserves, staying flexible with spending, and covering essentials with guaranteed income all reduce how much you must sell during a downturn.

Apply This to Your Own Plan

Schedule your complimentary, no-pressure Retirement Income Review with Tim. Call (727) 692-5866 or book below.

Annuities are insurance contracts. Guarantees, including guaranteed lifetime income benefits where available, are subject to the claims-paying ability of the issuing insurance company. Product features, fees, withdrawal restrictions, and surrender charges vary by contract.