Your retirement year and how sequence risk has played out so far

[Major Tom]

According to a calculator, the annualized S&P 500 return from January 2000 to September 2017 is only 1.076%. It would be 2.977% with dividends reinvested. So valuation does matter. When you retire does matter. Money should be discounted when the valuation is high.

2.97% real return doesn't sound too bad to me. I am financially simple, so excuse me if I'm missing the point, but the problem I have with these reports of supposedly low returns between selected dates is that very few of us put all of our money into the market on one date and then withdraw it all on one (different) date. Rather, we DCA into the market over many years, and do the same in reverse when retired, hopefully also over many years.

 

[flintnational]

Sequence of return risk and a 30% market decline

We retired in 2013/14. Between the investment growth since retirement and our asset allocation (70/30), a 30% market decline would put our investments below our starting retirement number by only about 10%. We would be at a 4% WR. I guess this is where favorable sequence of return risk makes a difference.

FN

 

[Taxman59]

Retired with a WD of 5% of current assets (a significant future inflow is due in about 8 years). In addition to the 5%, paid off the mortgage (2%) several unexpected medical events (1.5%) and the assets are slightly up and the WD is down to 4.5% with $$ left over each month. The sequence of return has allowed me to increase spending on fun (travel) and think about some larger capital items (a camper and the necessary truck, a beach house etc.). Nice thing is, our non-discretionary spending has decreased so that we have a higher net worth and a lower minimum burn rate! So when the next downturn arrives, we will be a good place and can hunker down and ride it out!

 

[audreyh1]

I like that term - minimum burn rate.

Many folks here have seen their retirement assets grow such that there is a big cushion built up to help weather a bad sequence of returns.

Me - I've also been letting unspent income build in short-term funds as our income from these recently fast growing retirement funds has been outpacing our spending. This provides additional cushion as well as funds for one time splurges or gifts as desired.

 

[hesperus]

As a 2011 retiree, you've already won the SORR lottery by catching that massive decade-long bull run right out of the gate. A crash now hurts, but it won't break your retirement trajectory like a crash in 2012 would have

 

[Koolau]

As a 2011 retiree, you've already won the SORR lottery by catching that massive decade-long bull run right out of the gate. A crash now hurts, but it won't break your retirement trajectory like a crash in 2012 would have

Yeah, some 10 years later, now. "Plenty" of cash/cash-like investments that likely would cover most unpleasant SORR-lottery situations. Also 10 fewer years left to cover a bad SORR apocalypse.

One of the few advantages of old age is that I have a lot fewer years to worry about remaining solvent. Still, I'm planning (financially) for 20 more years (age 99) so a lot can happen in that time (if I should live so long).

Check back in 10 years!

 

[street]

Retired in 2016 and still at a high risk status of >80% equity investing. I opted to not do ROTH conversions so will be in a higher tax bracket in about 4 years. I will risk that option and reinvest all RMD back into the markets each year. Bear markets maybe my friend through some of those years but who knows.

I have always played the game unorthodox way and have done fine and will continue to roll as I have for the last 50 years I have been investing.

 

[FREE866]

Wow. This thread was started in 2017 and the worry over the CAPE and "high valuations" really proves that making investment decisions based solely on that criteria is really detrimental to performance.

 

[Taxman59]

Retired in 2015. WR was budgeted for about 5% for a few years then a large influx of assets was budgeted to push the WR down to about 3%.
Actual spending has been about 10% higher, in addition we have bought a camper and a beach house, yet our assets are about 5% higher than expected.
The SOR has been favorable to say the least. I am planning on a 99 yo birthday party (100 seems to be too much!) so I still need another 32 years. I'm keeping my 90+% allocation to stocks (though I am not as aggressive in the stock market as I once was), and expect there to be several significant downturns over that time, but I figure that I have plenty of low cost hobbies to keep me busy.

 

[Andre1969]

I retired on 4/30/2025, so I'm only a little over 14 months into it. But, I'm doing okay so far. Invested asset total is up about 28.9% since then, despite having to live off of it.

I'm still early enough into it that a bad sequence of returns could make me worry a bit. But, my current withdrawal rate, using last Thursday's (7/2/26) numbers, is running a whopping 2.08%. I think I have a little wiggle room!

 

[robnplunder]

I also retired two years ago but plans to keep my 60/40 ratio.

Wow, this was my reply 8 years ago. My portfolio is 70/30 now. My liquid asset has increased by 25%. My house equity went up by 40%. In a few years, DW and I will draw from SS. I am considering some form of wealth transfer to DS, a little bit at a time. My retirement planning 10 years ago was a complete success.

 

[audreyh1]

I retired in 1999, and so it's now over 18 years and two nasty bears and net worth is still up 75% (knock on wood).

But I don't feel like I'm out of the woods in terms of sequence of risk until of make it to 70 maybe - still another 12 years.

What is the sequence of risk time frame really for an early retiree? Is it really just 15 years? Maybe 15 corresponds to a 30 year "normal" retirement.

I like that term - minimum burn rate.

Many folks here have seen their retirement assets grow such that there is a big cushion built up to help weather a bad sequence of returns.

Me - I've also been letting unspent income build in short-term funds as our income from these recently fast growing retirement funds has been outpacing our spending. This provides additional cushion as well as funds for one time splurges or gifts as desired.

These are my replies almost 9 years ago. We are both on Medicare now and DH started SS. Definitely more focused on spending accumulated excess now and very aware that we likely have fewer good travel years left. I suppose not so concerned about sequence of return risk since investments have continued to grow since 2017 even with 2020 and 2022 bear markets.

 

[stepford]

My retirement planning 10 years ago was a complete success.

Given the market over the last 10 years it was kind of hard for it not to be. I retired in late 2015, have a 'do-nothing' portfolio with an AA that fluctuates between 60/40 and 45/55 (on the rare occasions when I remember to rebalance). Even with this level of negligence my NW is still about 2.5x what it was when I retired.

I know it won't last but managing retirement these last 11 years has been easier than falling off a log.

 

[robnplunder]

I retired in late 2015, have a 'do-nothing' portfolio

Yeah, I also didn't do hardly any rebalancing. The market did its job, and even if the market corrects (it will sooner or later), I believe I can ride it out. Knock on wood.