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Tools/Retirement withdrawals & early access/Sequence of Returns Risk Calculator✓ CHECKED AGAINST WORKED EXAMPLES · SEP 29, 2026

How much does the order of returns change my outcome?

Sequence of returns risk calculator: the same average return in a different order, and how much a bad start to retirement changes your ending balance.

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How far do good and bad years swing from the average?
Five years 15 points below the average, then five years 15 points above it; the other order is the exact reverse. A fixed illustration, not a forecast or a historical back-test.
IF THE BAD YEARS COME FIRST
$58,472
Same 3.9% average return, same $16,800 withdrawals: five years at −11.1% then five at +18.9% leave $58,472 after 30 years; the same ten returns in reverse leave $374,535. Order alone moves the result by $316,063.
Bad years last
$375k
Order gap
$316k
Steady 3.9%
$361k
Yearly withdrawal
$16,800
UNDERSTAND YOUR RESULT
LIBRARY CHAPTERTurning Savings into IncomeHow much a portfolio can pay each year, why the order of returns early in retirement matters, ways to make a withdrawal plan sturdier, and a basic order for drawing from accounts.LIBRARY CHAPTERThe Transition: Leaving Work WellDeciding when the plan is good enough to leave, why a little income in the first years helps so much, the practical checklist for the last year of work, and the identity, structure and social life a job used to supply.QUICK ANSWERWhat is the 4% rule?The 4% rule says that if you withdraw 4% of your portfolio in the first year of retirement and raise that amount with inflation each year, your money lasted at least 30 years in every period of US market history that its author tested from 1926. It is a finding about the past, built for 30-year retirements, not a guarantee.
Terms:Sequence of returns riskProtective put

What the order does to your balance

$912k$456k$0Yr 0Yr 10Yr 20Yr 30Yr 5: swing flipsYr 10: swings endBad years firstBad years lastSteady 3.9%

All three lines share the same 3.9% average return. With −11.1% for five years then +18.9% for five, the balance ends at $58,472; in reverse order it ends at $374,535; with a steady 3.9% every year it ends at $360,695.

How much a lower withdrawal protects a bad start

Bad years lastBad years first
3.0% · $12,600
$579k
$342k
3.5% · $14,700
$477k
$200k
4.0% · $16,800 (yours)
$375k
$58k
4.5% · $18,900
$272k
$0
5.0% · $21,000
$170k
$0

With the bad years first, 4.0% leaves $58,472; half a point less (3.5%) leaves $200,061; half a point more (4.5%) runs out in year 27.

How much bigger swings matter

Bad years lastBad years first
No swings
$361k
$361k
±5 pts
$397k
$291k
±10 pts
$401k
$190k
±15 pts
$375k
$58k
±20 pts
$322k
$0

Swings are what make order matter. With none, both orders end at $360,695; at ±15 points a bad start ends at $58,472 and the reverse order ends at $374,535.

What moves the needle

Each row re-runs the calculation with one change. Click to apply.

How it's computed

FORMULA
B(t) = (B(t−1) − W) × (1 + r(t)), t = 1 … N
Bad years first: r = m − s for years 1–5, m + s for years 6–10, m after
Bad years last: the same ten returns in reverse order, m after
Same average m and same growth without withdrawals; only the order differs
  • Returns are real (after inflation). The withdrawal is the same $16,800 of today’s money every year, taken at the start of the year before that year’s return.
  • Both orders use the same ten returns: five years at −11.1% and five at +18.9% (a 15-point swing around the 3.9% average), then 3.9% every year after. Their average return, and their growth without withdrawals, are identical; only the order differs.
  • It is a hypothetical illustration, not a forecast and not a historical back-test.
  • Returns that swing compound to less than a steady return with the same average, so the steady line is a reference, not a midpoint.
  • This pattern is evenly spread, so it is not a worst case: real bear markets are lumpier, and a single year can be much deeper than −11.1% (the S&P 500, dividends included and before inflation, lost more than 36% in 2008 and more than 43% in 1931; Damodaran, NYU Stern).
  • Not modeled: taxes, fees, spending that changes, cash reserves, bond tents or glide paths.
WORKED EXAMPLE · SAMPLE NUMBERS
Start with $420,000 and withdraw $16,800 (4.0%). Year 1 with a −11.1% return: ($420,000 − $16,800) × (1 − 11.1%) = $358,445. Year 1 with +18.9%: $403,200 × (1 + 18.9%) = $479,405. Same money, same withdrawal, and the two paths are already $120,960 apart. Carry each forward 30 years on its own returns: the first ends at $58,472, the second ends at $374,535.
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Questions about this result

The risk that the order of returns, not just their average, decides whether your money lasts. When you are withdrawing, a loss early in retirement shrinks the balance that has to fund every later withdrawal, so it does more damage than the same loss late in retirement. With no withdrawals or deposits, order would not change the ending balance at all.
Because withdrawals turn order into a compounding problem. Both paths get exactly the same ten returns, so without withdrawals they would finish at the same balance. With withdrawals, the bad-years-first path takes money out while prices are low and is left with less to recover on. For example, $1,000,000 withdrawing $40,000 a year at a 3.9% average return with ±15-point swings ends at $139,219 after 30 years with the bad years first and $891,751 with them last.
A great deal. For $1,000,000 at a 3.9% average return with ±15-point swings over 30 years, a bad start still leaves $476,335 at a 3.5% withdrawal and $139,219 at 4%, and runs out in year 27 at 4.5%.
The main tools are a lower starting withdrawal rate, spending that can shrink after a bad year, a cash or bond reserve to draw on while stocks recover, and a stock allocation that starts lower and rises over time. Guyton and Klinger (2006) studied withdrawal decision rules, and Pfau and Kitces (2014) studied a rising equity glide path. This calculator models only the first, through the withdrawal rate; the charts on this page show how large its effect is.
Neither. It is a fixed illustration: five years a chosen number of points below the average, then five the same number above, in one order and in its exact reverse, then the average every year after that. Real markets never arrive in a pattern this tidy: bear markets are lumpier, and one year can be far deeper than any year here (the S&P 500 lost more than 36% in 2008, dividends included and before inflation). For a spread of random outcomes, use the Monte Carlo simulator.
Returns that swing compound to less than a steady return with the same average. With the default 3.9% average and ±15-point swings, a −11.1% year followed by a +18.9% year grows money by 5.7%, while two years at 3.9% grow it by 8.0%. The steady line is a reference, not a midpoint, and at low withdrawal rates both orders can end below it.
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