Sequence of Returns Risk Calculator

This calculator demonstrates sequence of returns risk, one of the most underappreciated dangers in retirement, by showing how the order in which returns arrive can dramatically change the outcome of a drawdown even when the average return is identical. While you are saving, only the average matters, because you are not touching the money. The instant you start withdrawing an income, order becomes critical: a market slump in the first few years, while you are selling units to live on, leaves far fewer units to recover when markets rebound, permanently scarring the portfolio. The same slump late in retirement does far less harm. To make this concrete, the calculator runs two scenarios with the exact same set of returns and the same withdrawals, but in opposite order: bad years first, then good years, against good years first, then bad. You enter your starting balance, your annual withdrawal, the number of years, an average return and a swing that sets how good and bad the halves are, and it reports the ending balance under each order. The gap between them is pure sequence risk. The practical lessons follow: hold a cash buffer so you need not sell after a fall, stay flexible with spending in bad years, and tread carefully in the first years of retirement.

Both scenarios use the same returns and withdrawals, only the order differs, so any gap is sequence risk. Illustrative, not a forecast. Estimate only.