The Worst Years to Retire in History (And What Actually Happened)

Your financial adviser shows you a chart. "Historically, the market returns 7% per year on average."

True. But useless.

Because if you retire in the wrong year, that 7% average won't save you. Early losses compound. Your portfolio shrinks. You're drawing down a smaller base. And by the time the market recovers, it's too late.

This is sequence of returns risk. And it's the difference between a comfortable retirement and running out of money.

The Methodology

Before we dive in, here's what we tested:

• Starting balance: $1,000,000 in super
• Profile: Single, homeowner, age 67
• Asset allocation: 60% S&P 500 / 40% Bonds (as one example allocation)
• Age Pension: Included, with year-by-year means testing and deeming
• Fees: Standard super fund fees ($52 flat + 0.7% of balance)
• Goal: Maximum sustainable income for 30 years (or period length limited by available data)

Important: All income figures below include Age Pension payments based on current Centrelink rules applied to each historical scenario. These are not portfolio-only returns.

Note on asset allocation: Our calculator supports multiple asset classes including Australian shares (ASX), international shares (MSCI), US shares (S&P 500), bonds, cash, and property. The 60/40 S&P/Bonds allocation shown here is just one example. You can test any allocation mix.

We used real historical data for all asset classes and inflation. No assumptions. No Monte Carlo simulations. Just what actually happened.

1. Retiring in 1929: One of the Two Worst Periods (30 Years)

What happened: September 1929. The market peaked. By 1932, the S&P 500 had fallen 83% from its high. Unemployment hit 25%. Banks failed.

A retiree starting in September 1929 with $1 million could only safely withdraw $54,504 per year (inflation-adjusted) to make their money last 30 years. Along with 1969, this represents one of the two worst 30-year retirement periods in recorded history.

The Great Depression crash was severe and prolonged. The market didn't fully recover until the 1950s. Three consecutive years of devastating losses (1929-1932) depleted portfolios early in retirement, creating permanent damage.

Key insight: Despite being the most famous crash, 1929's deflationary environment (prices actually fell during the early 1930s) provided some relief. Whether 1929 or 1969 was worse depends on the specific portfolio composition, but both represent the absolute worst-case historical scenarios for retirement.

2. Retiring in 1969: The Other Worst Period (30 Years)

What happened: Retiring in 1969 meant you hit 1973-74's brutal stagflation in years 5-6 of your retirement. You were already drawing down for four years when the worst inflation and market combination in modern history hit.

The S&P 500 fell 8.5% in 1969. It recovered slightly in 1970-72, then crashed with -14.8% in 1973 and -26.6% in 1974. Meanwhile, inflation spiked to 9% then 16%.

Maximum sustainable income: $54,785/year. Virtually identical to 1929, making 1969 one of the two worst years to retire in history. Which was worse depends on portfolio composition, but both represent the absolute worst-case scenarios.

Key insight: Retiring just before a major crisis can be as bad as retiring into it. A 1969 retiree had less capital remaining when stagflation hit, making the sequence of returns even more damaging.

3. Retiring in 1973: Stagflation (30 Years)

What happened: 1973-74 was the stagflation nightmare. The S&P 500 fell 14.8% in 1973, then another 26.6% in 1974. Bonds returned -1.2% in 1973. Inflation hit 9% in 1973 and 16% in 1974.

Stocks down, bonds down, inflation up. The nightmare scenario.

Yet despite this brutal combination, 1973 retirees could sustain $57,202/year over 30 years. That's actually higher than both 1929 and 1969.

Why? The Age Pension. By 1982 (year 10), the portfolio had dropped to $329,262, and the Age Pension was providing $30,480/year. By year 26, the pension covered most of the income as the super balance depleted.

Key insight: Without the Age Pension, 1973's sustainable income drops to just $29,500/year (see our analysis here). The pension nearly doubled the sustainable income, making 1973 less severe than 1929 or 1969 despite the stagflation.

4. Retiring in 2008: The GFC (18 Years Available)

Data limitation: We only have 18 years of data for 2008 (2008-2025), not a full 30-year period. So this isn't directly comparable to the 30-year simulations above.

What happened: The S&P 500 fell 37% in 2008. Lehman Brothers collapsed. Credit froze. The entire financial system nearly failed.

But the recovery was swift. By 2013, the market had fully recovered. From 2009 to 2021, the S&P 500 delivered one of the best bull runs in history.

A 2008 retiree, over the 18 years we can measure, could have withdrawn $86,938/year. That's significantly higher than the 1970s and 1930s scenarios, but remember: this is only 18 years, not 30. We can't know how this cohort would fare if we had data through 2037.

Key insight: Sharp crashes with quick recoveries are less damaging to retirement portfolios than prolonged periods of poor returns. The 2008 GFC hurt, but the strong 2009-2021 recovery saved a 2008 retiree.

5. Retiring in 2000: Dot-com Bust (26 Years Available)

Data limitation: We only have 26 years of data for 2000 (2000-2025), not a full 30-year period.

What happened: The dot-com bubble peaked in March 2000. Tech stocks crashed. The S&P 500 fell 10.1% in 2000, 13.0% in 2001, and 23.4% in 2002. Three consecutive down years.

Then, just as the market started recovering in 2003-2007, the GFC hit in 2008. A 2000 retiree experienced two major crashes in their first nine years of retirement.

For the 26-year period we can measure (2000-2025), a retiree could have sustained $63,574/year. But again, this isn't a full 30-year test.

Key insight: Multiple crashes in close succession (2000-2002, then 2008) test a retirement plan severely, but not as severely as the prolonged challenges of the 1920s-30s or late 1960s-early 1970s.

The Common Thread: Sequence of Returns Risk

What do all these scenarios have in common?

Poor returns early in retirement.

• 1929: 83% crash over three years (WORST)
• 1969: Down year followed by stagflation four years later (2nd worst)
• 1973: Two consecutive down years (-14.8%, -26.6%) with high inflation (3rd worst)
• 2008: -37% in year one
• 2000: Three consecutive down years

The order matters. If you get 30 years of average 7% returns but the first five years are negative, your portfolio depletes. You're selling assets at low prices to fund withdrawals. When the market recovers, you own fewer units.

Conversely, if you get the same 30-year average but the first five years are strong, you're withdrawing from a growing base. Your portfolio compounds faster than your withdrawals deplete it.

This is why average returns are meaningless for retirement planning. You need to test your plan against actual historical sequences.

What About the Age Pension?

Notice how all these scenarios show sustainable incomes in the $54,000-$63,000 range (for 30-year or near-30-year periods) from a $1 million starting balance?

That's because the Age Pension acts as a safety net. As your super depletes, your pension entitlement increases. By year 20-30 in most of these scenarios, the Age Pension is covering a significant portion of income.

In the 1973 scenario, we calculated what would happen without the Age Pension: sustainable income drops to just $29,500/year. The pension nearly doubles the safe withdrawal rate, which is why 1973 ends up better than 1929 or 1969 despite the brutal stagflation.

This is why accurate Age Pension modeling in your retirement calculator is critical. Read our full analysis here.

So What's a Safe Withdrawal Rate?

Based on the two worst 30-year periods (1929 and 1969), a retiree with $1 million, a 60/40 portfolio, and accurate Age Pension modeling could sustain about $54,500/year.

That's a 5.45% initial withdrawal rate.

But here's the caveat: that's for a single, homeowner, Australian retiree with Age Pension eligibility. Your situation might be different:

• If you're a couple, thresholds and pension rates change
• If you're a non-homeowner, asset test thresholds are higher
• If you have other income, your pension entitlement decreases
• If you want a higher final balance (bequest), your sustainable income is lower

This is why cookie-cutter withdrawal rate rules ("4% is safe!") are inadequate. You need to test your scenario.

Test Your Own Plan

You can run these exact simulations yourself.

Our Advanced Calculator includes:

• Historical backtesting: Test any retirement start year from 1928 to 2025
• Rolling period analysis: See your maximum sustainable income for every historical period
• Accurate Age Pension modeling: We model both asset and income tests for individuals and couples, updating rates, thresholds, and rules on a weekly basis to ensure complete accuracy and ASIC compliance
• Year-by-year recalculation: Research by Super Consumers Australia found that NO calculator tested dynamically recalculates assets, deemed income, taper rates, and test selection for each year of retirement. Our calculator does this automatically as your super balance changes.
• Dynamic drawdown interaction: Unlike other calculators that assume fixed patterns, we recalculate your Age Pension eligibility based on your actual super balance and withdrawals each year
• Customizable inputs: Your age, super balance, asset allocation, fees, and desired final balance
• Visual results: Charts showing your super balance, income sources, and pension over time

Why this matters: In the 1973 scenario, accurate year-by-year pension modeling is the difference between $29,500/year (no pension) and $57,202/year (with accurate pension calculations). The pension starts at $0, increases to $30,480/year by year 10, and covers most income by year 26. Static calculators can't model this.

Enter your numbers. Run the 1929 stress test. See what actually happens to your portfolio in the worst historical scenario.

That's your real safety margin.