.png){kind=small}
As an investor, you'll encounter times when volatility picks up and markets cycle slower. These times call for resilience. But, if you're just starting to withdraw from your portfolio, that resilience is best paired with careful timing.
Understanding Sequence of Returns Risk
"Sequence of Returns Risk" involves the timing of withdrawals from your portfolio. If not handled carefully, withdrawals can impact your portfolio's overall value over the long term.
A Tale of Two Retirements: Maria and Tom
For example, take Maria and Tom. Both Maria and Tom reached age 65 with roughly $2 million invested. Now, imagine that Tom experiences a market setback in his first year of retirement.
Maria sees the setback later in her retirement years. By the age 75, Maria's retirement had grown while Tom was left with less. That's because Maria's retirement had a chance to grow before the markets changed.
Preparing for Market Changes
While no one can control the weather, you can be prepared to adapt to changing conditions.