Guides / Sequence Risk
Retiring in 2007 versus 2009 with identical portfolios and withdrawal rates produced wildly different outcomes. The order of returns matters as much as the average. This hub explains why and what you can do about it.
Most super fund projections show you a single number: your projected balance at retirement. They use an assumed average return (often 7%) and a straight line. That's not how markets work.
Real markets have crashes. And if the crash happens in year one of your retirement, when you are also drawing income from the portfolio, the damage is permanent. You sell assets at the bottom to pay living expenses. The assets you sold can't participate in the recovery.
In accumulation, regular contributions during a downturn are a good thing (you buy units cheaper). In decumulation, regular withdrawals during a downturn are a bad thing (you sell units cheaper). The same market volatility that helps you in accumulation actively hurts you in retirement. This asymmetry is what makes sequence risk a distinct and serious problem for retirees, not just generic market risk.
1929, 1937, 1973, 2000, 2007: the years when sequence risk hit hardest. What made them so damaging and what outcomes followed.
Read the article →Why Monte Carlo simulation and historical backtesting give different answers, and why you should look at both rather than rely on either alone.
Read the article →The extreme case: retiring into a multi-year bear market. How different portfolios and withdrawal strategies survived the Great Depression and subsequent recovery.
Read the article →Fixed withdrawal rates fail under sequence risk. Dynamic strategies (Guardrails, Floor-and-Ceiling, Dynamic SWR) cut spending when portfolios fall and increase it when they grow, dramatically improving survival rates.
Read the article →How to run your plan through the GFC, stagflation, and the dotcom crash to see if it survives the scenarios that have actually happened.
Read the article →Concentrated portfolios (single property, few stocks) have higher volatility than diversified ones. Under sequence risk, higher volatility means more permanent damage from early-retirement drawdowns.
Read the article →Most super fund and government projections use a single assumed return and no volatility. They systematically overstate outcomes for retirees with sequence risk exposure.
Read the article →Planning in nominal terms misses the impact of inflation on real purchasing power. The danger of building a retirement plan around today's dollars.
Read the article →Run your portfolio against every historical retirement start year from 1928 to 2023. Monte Carlo simulation across 1,000 scenarios. Enter your own balance, income, and asset allocation.
Run the Advanced Calculator (2 free runs) →See what your portfolio looks like under the worst historical market sequences, including 1929, 1973, 2000, and 2007.
Try the simulator →The Advanced Calculator runs your specific inputs (balance, income, asset allocation, fees) against every historical retirement period from 1928 to 2023, plus 1,000 Monte Carlo scenarios. See what your plan actually looks like under sequence risk, not a projected average.
Run My Stress-Test Free See Pro pricing2 free Advanced runs, no signup. Pro from $14.99/month for unlimited scenarios and SMSF suite. General information only, not financial advice.
General information only. Not financial, tax or legal advice. SuperCalc Pro Pty Ltd does not hold an AFSL. Past market performance does not guarantee future performance. Consult a licensed financial adviser before making retirement planning decisions.