A major market decline early in retirement can have a lasting impact on your income.
If you retire with $1,000,000 and the market falls 30% in your first year, your portfolio may drop to around $700,000. And once withdrawals begin, that loss doesn’t just affect your balance in the moment. It can change how much income your portfolio can support for the rest of retirement.
Even if the market eventually recovers, your income may never fully recover to the same level.
This is known as sequence of returns risk, and it’s one of the most important risks retirees face in the first few years after leaving work.
In this video, we walk through:
• Why early market declines can permanently affect retirement income
• What happened to retirees who entered retirement before the 2008 financial crisis
• Why two retirees with the same long term market returns can have very different outcomes
• How even moderate portfolios can still fall 20–30% in severe downturns
• Why the first five years of retirement are often the most important financial years of your life
This video isn’t about predicting market crashes. Markets will always be unpredictable.
It’s about understanding how your retirement plan responds if a major decline happens early, when your portfolio is at its largest and income has just begun.
If you're within five years of retirement, or within the first few years after retiring, understanding this risk is an important part of building a sustainable retirement income plan.
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