Sequence-of-returns risk — why timing matters for withdrawals. Sequence-of-returns risk describes the danger that poor investment returns in the early years of a withdrawal period—when an investor is taking regular distributions—can dramatically shorten portfolio longevity even if the long-term average return is unchanged. Early negative returns coupled with withdrawals reduce the asset base that would otherwise compound in better years, creating a lasting disadvantage. This risk is especially acute for retirees who begin drawing income at or near a market peak.

Mitigation strategies and practical planning. Reduce sequence risk through multi-bucket strategies (short-term cash reserve for 2–5 years of withdrawals, intermediate bond bucket, long-term growth bucket), dynamic spending rules (cut withdrawals when portfolio value drops), or partial annuitization to secure lifetime income. Glidepath approaches (shifting to more conservative allocations as one enters retirement) can help, but overly conservative early allocations also limit growth. Tax planning, delaying Social Security, and maintaining a cash buffer all reduce forced selling during downturns. Simulate retirement scenarios with varied return sequences to understand vulnerability and choose a combination of strategies that balance income certainty and growth potential.