Sequence of Returns Risk Calculator
See how the order of investment returns dramatically affects your retirement. Compare good-first vs bad-first.
Good Returns First
$0.00
Bad Returns First
$0.00
Difference
$0.00
Both scenarios use the same returns (20%, 15%, 10%, -5%, -15%, -25%) — just in different order. The average return is 0.0%/year. Without withdrawals, both end at the same value ($919,338.75). Withdrawals during down years permanently reduce the portfolio's recovery potential.
Good Returns First (With Withdrawals)
| Year 1 (20% return) | $1,140,000.00 |
| Year 2 (15% return) | $1,253,500.00 |
| Year 3 (10% return) | $1,323,850.00 |
| Year 4 (-5% return) | $1,210,157.50 |
| Year 5 (-15% return) | $986,133.88 |
| Year 6 (-25% return) | $702,100.41 |
| Year 7 (0% return) | $652,100.41 |
| Year 8 (0% return) | $602,100.41 |
| Year 9 (0% return) | $552,100.41 |
| Year 10 (0% return) | $502,100.41 |
| Year 11 (0% return) | $452,100.41 |
| Year 12 (0% return) | $402,100.41 |
| Year 13 (0% return) | $352,100.41 |
| Year 14 (0% return) | $302,100.41 |
| Year 15 (0% return) | $252,100.41 |
| Year 16 (0% return) | $202,100.41 |
| Year 17 (0% return) | $152,100.41 |
| Year 18 (0% return) | $102,100.41 |
| Year 19 (0% return) | $52,100.41 |
| Year 20 (0% return) | $2,100.41 |
| Year 21 (0% return) | $0.00 |
| Year 22 (0% return) | $0.00 |
| Year 23 (0% return) | $0.00 |
| Year 24 (0% return) | $0.00 |
| Year 25 (0% return) | $0.00 |
| Year 26 (0% return) | $0.00 |
Bad Returns First (With Withdrawals)
| Year 1 (-25% return) | $712,500.00 |
| Year 2 (-15% return) | $563,125.00 |
| Year 3 (-5% return) | $487,468.75 |
| Year 4 (10% return) | $481,215.63 |
| Year 5 (15% return) | $495,897.97 |
| Year 6 (20% return) | $535,077.56 |
| Year 7 (0% return) | $485,077.56 |
| Year 8 (0% return) | $435,077.56 |
| Year 9 (0% return) | $385,077.56 |
| Year 10 (0% return) | $335,077.56 |
| Year 11 (0% return) | $285,077.56 |
| Year 12 (0% return) | $235,077.56 |
| Year 13 (0% return) | $185,077.56 |
| Year 14 (0% return) | $135,077.56 |
| Year 15 (0% return) | $85,077.56 |
| Year 16 (0% return) | $35,077.56 |
| Year 17 (0% return) | $0.00 |
| Year 18 (0% return) | $0.00 |
| Year 19 (0% return) | $0.00 |
| Year 20 (0% return) | $0.00 |
| Year 21 (0% return) | $0.00 |
| Year 22 (0% return) | $0.00 |
| Year 23 (0% return) | $0.00 |
| Year 24 (0% return) | $0.00 |
| Year 25 (0% return) | $0.00 |
| Year 26 (0% return) | $0.00 |
Use the Sequence of Returns Risk Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.
Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.
How It Works
Our Sequence of Returns Risk Calculator reveals how the timing of your investment gains and losses profoundly impacts your retirement portfolio's longevity. It's not just about your average return; early market downturns can deplete your nest egg far faster than late ones, especially when you're withdrawing funds. This tool helps you visualize this critical risk, particularly relevant as we approach 2026 with potential market volatility.
The calculator employs a Monte Carlo simulation approach, projecting portfolio values under two distinct return sequences: 'Good-First' (high returns early, lower later) and 'Bad-First' (low returns early, higher later). Both scenarios utilize the same set of annualized returns, but their order is permuted. We subtract your specified annual withdrawal amount from the portfolio balance each year, then apply the simulated return.
Remember, this calculator illustrates a risk, not a prediction; actual market performance will vary. A common mistake is to assume a steady average return, ignoring the devastating impact of early negative returns. Consider diversifying your income sources and maintaining a cash buffer to mitigate sequence of returns risk.
Example: Early Retirement with a $1,000,000 Portfolio
- 1 Imagine you retire in late 2025 with $1,000,000, planning to withdraw $50,000 annually (5% withdrawal rate). We'll use a hypothetical average annual return of 7% over 20 years.
- 2 In our 'Good-First' scenario, the first five years see returns averaging 10%, followed by 6% for the next 15 years. In the 'Bad-First' scenario, the first five years average 4% returns, followed by 8% for the next 15 years. Both scenarios yield the same overall 7% average return.
- 3 After 20 years, the 'Good-First' portfolio still holds approximately $1,200,000. However, the 'Bad-First' portfolio is depleted by year 15, leaving you with no funds remaining.
- 4 This stark difference, despite identical average returns, highlights the devastating impact of early negative returns when combined with withdrawals. For someone retiring in 2026, understanding this risk is paramount for sustainable retirement planning.
Source: IRS · Last updated: April 2026
Frequently Asked Questions
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