Timing and Return Risk — Why When You Retire Matters More Than You Think
You’ve probably heard the phrase “time in the market matters more than timing the market.”
That’s mostly true — until you retire.
During your working years, steady saving and long-term growth tend to smooth out market ups and downs. But once you start drawing from your savings, the math changes. Suddenly, when you experience those ups and downs can make or break your plan.
When Order Matters
In retirement, returns don’t arrive neatly averaged over time. They come in unpredictable bursts — some good, some bad.
This creates what’s called sequence of returns risk — the danger that poor market performance early in retirement drains your portfolio faster than expected.
Here’s the key idea: the same average return can produce very different outcomes depending on timing. Two retirees with identical savings and identical investments can end up in completely different places depending on what the market does in their first few years of withdrawals.
It’s like the butterfly effect — one bad storm at the start of your journey can ripple through the decades that follow.
Why Timing Is Everything
When you retire into a rising market, your savings get a natural lift. But if the market dips just as you start drawing income, your portfolio may shrink faster than it can recover. Each withdrawal takes a slightly larger bite out of a smaller pie. Even if markets bounce back later, the lost compounding can’t easily be replaced.
That’s why sequence risk is sometimes called the retirement date lottery. You can do everything right — save diligently, invest wisely, follow your plan — and still face challenges simply because of timing.
The goal isn’t to predict market cycles, but to design a plan that can withstand them.
How We Plan for Timing Risk
Your RISA® profile gives insight into how to approach this challenge based on what helps you feel most secure:
Safety-First and Commitment: You may prefer to lock in guaranteed income for essential needs through sources like Social Security, pensions, or annuities. These income anchors insulate your lifestyle from market swings, so your retirement doesn’t depend on short-term performance.
- Probability-Based and Optionality: You might value flexibility and market participation. For you, strategies like maintaining a “cash buffer” or short-term bucket can prevent forced selling during downturns, giving your long-term investments time to recover.
Blended Strategies: Many retirees fall in between — using a mix of reliable income and growth assets to protect today’s spending while nurturing tomorrow’s potential.
Turning Risk Into Resilience
Sequence of returns risk can’t be eliminated, but it can be managed. A well-built retirement plan anticipates market volatility and adapts over time.
Your retirement isn’t a straight line; it’s a landscape that changes with every season.
The key is to build a plan strong enough — and flexible enough — to weather those seasons without losing sight of your purpose and peace of mind.
If you’d like to see how your retirement income strategy holds up under different market conditions, let’s review it together. A conversation today can protect the confidence you’ll need tomorrow.
Click here to schedule your 15-minute Retirement Fit Call.
Let's make sure your retirement journey is as secure and fulfilling as you envision.
