Early Losses Hurt Most
A 25% market drop in year 1 of retirement is far more damaging than the same drop in year 20. You're selling shares at low prices, leaving fewer to recover when the market rebounds.
Retirement Stress Test
Free Sequence of Returns Risk Calculator
What if the market crashes the year you retire? Stress-test your plan by simulating a downturn in year 1, 5, or 10. See how timing risk could affect your portfolio — free, no signup.
Stress Test Comparison
Timing can make or break retirement
Two retirees with identical savings and identical average returns can have wildly different outcomes depending on when the bad years happen. This is sequence of returns risk.
Average Returns Lie
Your average return might be 7% over 30 years, but if the bad years come early while you're withdrawing, your portfolio may run out. Order matters, not just average.
Plan for the Worst
Use our stress test to see your worst-case scenario. Then build a plan with cash buffers, flexible withdrawals, or reduced equity exposure to protect against timing risk.
How It Works
Stress test your retirement
Our Sequence of Returns stress test lets you simulate a market crash at any point in your timeline and compare the outcome to your baseline projection.
1. Set Up Your Projection
Enter your assets, expected returns, and any planned withdrawals or events. This becomes your baseline scenario.
2. Choose Crash Year
Select which year the simulated crash occurs — year 1, year 5, year 10, or any year in your timeline.
3. Set Crash Magnitude
Choose how severe the crash is — 20%, 30%, 50%. The stress test applies this drop to your portfolio in the chosen year.
4. Compare Results
See your baseline projection and crash scenario side by side. Visualize how the timing of the crash affects your long-term net worth.
Strategies to reduce sequence risk
Once you understand your exposure to sequence of returns risk, you can take steps to protect your retirement.
Cash Reserve
Keep 1-2 years of expenses in cash or short-term bonds. Draw from this buffer during downturns so you don't sell equities at a loss.
Variable Withdrawals
Use a flexible withdrawal strategy that reduces spending in bad years. Cutting 10-20% in a down market can significantly extend portfolio life.
Reduce Equity Before Retirement
Gradually shift to a more conservative allocation as you approach retirement. Less equity means less exposure to early-year crashes.
FAQ
Sequence of returns questions
Sequence of returns risk (SoRR) is the danger that poor market returns early in retirement will deplete your portfolio faster than poor returns later. If you retire into a bear market and start withdrawing, your portfolio may never recover — even if average returns over your retirement are fine.
When you're withdrawing from your portfolio, early losses are devastating. A 25% drop in year 1 means you're selling more shares to cover expenses, leaving fewer shares to benefit from future recovery. The same 25% drop in year 20 has less impact because you've already grown your portfolio.
Our Sequence of Returns stress test lets you simulate a market crash of a specific magnitude (e.g., 25%) in a specific year (e.g., year 1, 5, or 10). It compares the crash scenario to your baseline projection so you can see the long-term impact of timing.
Common strategies include: maintaining a cash buffer for 1-2 years of expenses, reducing equity allocation as you approach retirement, using a flexible withdrawal strategy that reduces spending in down markets, and delaying Social Security to reduce early withdrawals.
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Learn MoreStress test your retirement plan
See how a market crash at the wrong time could affect your portfolio. Free, no signup.
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