Sequence of Returns Calculator
How long your money lasts in retirement, and why the order of returns matters
Enter your savings and see how long they last
Free · No sign-up · Updates as you typeUS$
What you retire with, e.g. 1,000,000.
US$
Fixed amount you live on, e.g. 50,000.
%
Applied every year, e.g. 5 for 5%.
How many years to model, e.g. 10.
After 10 years at a steady 5.0% a year
US$ 1,000,000
In plain terms: at a steady 5.0% every year, your US$ 1,000,000 earns US$ 50,000 in the first year while you withdraw US$ 50,000. Keep that up for 10 years and you end with US$ 1,000,000.
| Year | Return | Withdrawn | Balance |
|---|---|---|---|
| 1 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 2 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 3 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 4 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 5 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 6 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 7 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 8 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 9 | 5.0% | US$ 50,000 | US$ 1,000,000 |
| 10 | 5.0% | US$ 50,000 | US$ 1,000,000 |
But real markets are never that steady
The S&P 500 never hands you the same 5.0% every year. One year it might jump 25%, the next it falls 18%. While you are withdrawing, the ORDER of those good and bad years changes everything, even when the average is still 5.0%. Here are the same returns in their worst and best order:
Bad years first
US$ 727,918
Good years first
US$ 1,087,285
Same 5.0% average, same steady US$ 1,000,000 on paper, yet the order alone opens a US$ 359,367 gap. That is sequence of returns risk: a bad start, while you are withdrawing, does damage a good average can never undo.
| Year | Return | Bad years first | Return | Good years first |
|---|---|---|---|---|
| 1 | -11.0% | US$ 840,000 | 21.0% | US$ 1,160,000 |
| 2 | -7.4% | US$ 727,467 | 17.4% | US$ 1,312,356 |
| 3 | -3.9% | US$ 649,176 | 13.9% | US$ 1,444,627 |
| 4 | -0.3% | US$ 597,012 | 10.3% | US$ 1,543,905 |
| 5 | 3.2% | US$ 566,249 | 6.8% | US$ 1,598,548 |
| 6 | 6.8% | US$ 554,629 | 3.2% | US$ 1,600,057 |
| 7 | 10.3% | US$ 561,940 | -0.3% | US$ 1,544,723 |
| 8 | 13.9% | US$ 589,987 | -3.9% | US$ 1,434,650 |
| 9 | 17.4% | US$ 642,907 | -7.4% | US$ 1,277,849 |
| 10 | 21.0% | US$ 727,918 | -11.0% | US$ 1,087,285 |
The main result applies your return as a steady, constant rate, the simplest honest projection of a portfolio you are drawing from. Each year earns the return first, then your fixed withdrawal is taken at year-end. The section below shows the real-world catch: spread that same average across a realistic up-and-down decade and the order of those years changes the outcome.
balance = balance × (1 + return) − withdrawal
Because the return is earned before the withdrawal is taken, a steady return that exactly covers your withdrawal holds the balance flat, e.g. 5% on 1,000,000 earns 50,000 and you take 50,000, so you stay at 1,000,000. If a year cannot fund the withdrawal, the portfolio is marked as run out and the balance is zero from then on.
Step 1: Enter your starting portfolio and the fixed amount you plan to withdraw each year.
Step 2: Set your yearly return and the number of years. The main result shows that return applied steadily, year after year.
Step 3: Scroll to the "real markets" section to see how the same average, with the bad years first instead of last, changes the ending balance.
What Is Sequence of Returns Risk?
Sequence of returns risk is the risk that the order your investment returns arrive in, not just their long-run average, decides whether your portfolio lasts through retirement. While you are still saving and not withdrawing, the order is irrelevant: a portfolio left untouched compounds to the same final value no matter which years were good and which were bad. The moment you start taking fixed withdrawals, the order suddenly matters enormously.
The reason is simple. When you withdraw a fixed amount each year and the market has just fallen, that withdrawal is a larger slice of your shrunken portfolio. You sell more of your holdings to fund the same lifestyle, permanently reducing the base that would otherwise have recovered in the rebound. A retiree who hits a steep loss in their first year can run out of money years earlier than an identical retiree who met that same loss near the end, even though both earned the exact same average return.
How This Calculator Works, With a Worked Example
The calculator is deterministic rather than a Monte Carlo simulation, so the results are exact, not probabilistic. Each year it earns the return first, then takes your fixed withdrawal at year-end, using balance = balance × (1 + return) − withdrawal. The main result applies your return as a steady, constant rate. To show the real-world catch, it then spreads that same average across a realistic up-and-down decade and runs it twice, once with the down years first and once with them last.
Here is a small worked example of the order effect. Start with a $100,000 portfolio, withdraw $10,000 at the end of each year, and earn +30%, 0%, then −30%. Year one: $100,000 × 1.30 − $10,000 = $120,000. Year two: $120,000 × 1.00 − $10,000 = $110,000. Year three: $110,000 × 0.70 − $10,000 = $67,000. The portfolio ends at $67,000.
Now reverse the order to −30%, 0%, +30% and change nothing else. Year one: $100,000 × 0.70 − $10,000 = $60,000. Year two: $60,000 × 1.00 − $10,000 = $50,000. Year three: $50,000 × 1.30 − $10,000 = $55,000. The portfolio ends at $55,000, a full $12,000 lower than the first order, despite an identical average. The only thing that changed was the order, and the early loss did the damage.
Why Withdrawals Turn One Average Into a Range of Outcomes
While you are saving, you can largely ignore sequence risk, and a stretch of poor early returns can even help a regular investor by letting them buy at lower prices. In the withdrawal phase the dynamic flips. Each withdrawal you take after a fall locks in a loss that can never recover, because those dollars are no longer invested for the rebound. The larger your withdrawal relative to the portfolio, the more punishing a bad opening sequence becomes.
This is the central reason behind the well-known 4% rule from the Trinity Study: it was set against historical return sequences, including the worst real starting years, so that a balanced portfolio could sustain inflation-adjusted withdrawals for a 30-year retirement. A higher withdrawal rate leaves far less room for a bad opening decade. Use the calculator above to raise or lower your withdrawal and watch the gap between the two orders widen or narrow.
How to Manage Sequence of Returns Risk
You cannot remove sequence risk entirely, but several habits reduce it. Holding one to three years of spending in cash or short-term bonds, sometimes called a cash buffer or bond tent, lets you avoid selling shares right after a drop. A flexible approach that trims spending in down years protects the base when it is most fragile. A lower starting withdrawal rate and a globally diversified portfolio both add resilience. Since the danger is concentrated in the first five to ten years, that early window deserves the most caution.
Earning a little income in the early years is one of the most effective defences, because it directly cuts how much you must withdraw from a depressed portfolio. That is the structural advantage behind semi-retirement. Our Barista FIRE calculator shows how part-time income lowers the portfolio you need and cushions the riskiest years. To turn a withdrawal rate into a target portfolio in the first place, the present value calculator is a useful companion.
On the saving side, the order of returns barely matters, which is why steady, automated investing works so well for building the portfolio you will later draw from. Our compound interest calculator and dollar-cost averaging calculator both model how steady contributions grow a portfolio before retirement begins.
Frequently Asked Questions About Sequence of Returns Risk
Sequence of returns risk is the danger that the ORDER your returns arrive in, not just their average, decides whether your money lasts. It bites only while you are taking money out, such as in retirement. A run of bad years early, on top of your withdrawals, shrinks the capital base so the later good years have far less left to grow. Two retirees with the very same average return can end up worlds apart purely because of the order.
If you never touch the money, order changes nothing: a portfolio left alone ends at the same value whatever order the returns came in. The order only bites because withdrawals interact with it. Money you take out after a fall is a bigger slice of a smaller pot, so it locks in the loss and leaves less to recover in the rebound. Good early years let you draw from a bigger base and keep more invested.
It is deterministic, not a random Monte Carlo, so the numbers are exact and repeatable. Each year it earns the return, then takes your fixed withdrawal at year-end: balance = balance × (1 + return) − withdrawal. The main result applies your return as a steady, constant rate. Below it, to show the real-world catch, it spreads that same average across a realistic up-and-down decade and runs it twice: once with the bad years first and once with the bad years last.
Keep one to three years of spending in cash or short bonds so you are not forced to sell shares straight after a fall (a cash buffer). Trim spending in down years instead of withdrawing a fixed sum. Start with a lower withdrawal rate, stay diversified, and treat the first five to ten years as the danger zone. Earning a little income early in retirement also cuts how much you must pull from a depressed portfolio.
Yes. The more you take out relative to the pot, the more damage bad early years do, because you are selling a bigger share of a shrinking base. Drawing 3% a year survives a rough start far better than drawing 6%. That is the whole point of the 4% rule: it was set so that even historically awful starting years did not drain a portfolio over 30 years. Try raising the withdrawal here and watch the gap between the two orders widen.
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