Retirement Reality: What the Evidence Actually Says
If you’ve accumulated significant wealth, retirement planning becomes less about growth—and more about sustainability.
And one of the most misunderstood risks is not how much the market returns—but when those returns occur.
Why Average Returns Can Be Misleading
Most investors focus on averages. But in retirement, averages can obscure what matters most.
Two retirees may earn the same average return—but experience very different outcomes.
What Is Sequence of Returns Risk?
Sequence of returns risk refers to the impact of return timing on a portfolio during withdrawals.
A Simple Example
- Retiree A experiences strong returns early, then declines later
- Retiree B experiences declines early, then strong returns later
Even with identical averages, Retiree B may run out of money sooner.
Why Early Losses Matter More
When withdrawals are happening:
- Losses reduce the portfolio
- Withdrawals lock in those losses
- Less capital remains to recover
This creates a compounding effect that is difficult to reverse.
What the Evidence Shows
Research consistently shows:
- Early retirement years are the most fragile
- Market volatility is unavoidable
- Planning—not prediction—is the solution
How to Plan for Sequence Risk
Diversification
A diversified portfolio reduces reliance on any single market outcome.
Flexible Withdrawals
Adjusting spending during downturns can preserve long-term sustainability.
Cash Flow Structuring
Maintaining short-term reserves can reduce the need to sell during declines.
Discipline
Avoiding reactive decisions is critical.
Reframing Retirement Risk
The key question is not:
“What return will I earn?”
But:
“How will my plan respond if returns come in a difficult order?”
The Bottom Line
In retirement, timing matters more than averages—and planning matters more than prediction.
About Mayfair Financial
At Mayfair Financial, we design retirement strategies that account for real-world risks like sequence of returns—not just theoretical averages.
The content is developed from sources believed to provide accurate information. The information in this material is for educational purposes only and is not intended as tax, investment, or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal, investment, or tax professionals for specific information regarding your situation. Mayfair Financial and FMG Suite developed and produced this material to provide information on a topic of interest. FMG is not affiliated with the named state-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.