◈ GLOSSARY · RETIREMENT
Sequence of Returns Risk.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
The risk that the order of investment returns — not just the average — wrecks a retirement plan. Two retirees with the same average return can end up in very different places if one hits a bear market in the first few years of withdrawals, because they're selling shares at a discount and locking in losses. The first 5–10 years of retirement matter disproportionately.
◈ IN PRACTICE
Example
Two $1M portfolios both average 7% over 30 years; one starts with three years of −15% returns while withdrawing 4%, the other starts with three +20% years. The unlucky-sequence retiree can run out of money a decade earlier despite the same average return.
◈ RECOMMENDED READING
