Sequence Risk First Year Drawdown
Calculator
Results
- End of year portfolio value
- 760,000
- Effective withdrawal rate (%)
- 5
- Total first year loss
- 240,000
Retirement planning results
| End of year portfolio value | 760,000 |
| Effective withdrawal rate (%) | 5 |
| Total first year loss | 240,000 |
formula-map diagram
- End of year portfolio value
- 760,000
- Effective withdrawal rate (%)
- 5
- Total first year loss
- 240,000
Retirement planning relationship
Formula
End = P × (1 + r) - W= 760000
Note
This is not financial advice. It is a simplified model: it applies the displayed standard formula to the figures you entered, assumes a single constant rate for every year, and ignores taxes, fees, sequence-of-returns risk, health costs, longevity risk and any country's specific pension, benefit or minimum-distribution rules. Real returns can be negative and real retirements rarely follow a smooth curve. Check the assumptions and consult a licensed adviser before acting on any figure.
More in Retirement planning
See all →Frequently asked questions
What is 'sequence of returns risk'?+
It's the risk that the order in which investment returns occur matters, not just their average — specifically, poor returns in the first few years of retirement do outsized, sometimes irreversible damage, because withdrawals during a downturn permanently lock in losses that a portfolio can't recover from later, even if long-term average returns end up being fine.
Why does this calculator focus specifically on the first year?+
The first year (and the first several years) of retirement is when sequence risk is most dangerous, because the portfolio is at its largest and has the most years of withdrawals ahead of it — a market drop combined with a withdrawal early on removes a larger proportion of the portfolio's future earning power than the same drop occurring later.
How is this different from just looking at average investment returns?+
Average returns treat every year the same regardless of order, but two retirees with identical average returns over 30 years can have vastly different outcomes if one experiences a crash in year one and the other in year twenty-nine — the calculator isolates and quantifies that first-year impact specifically.
What can retirees do to reduce sequence risk in early retirement?+
Common strategies include holding one to two years of expenses in cash or short-term bonds to avoid selling depressed assets, reducing withdrawals temporarily after a market downturn, maintaining some flexibility in spending, or using a bond ladder or bucket strategy to delay tapping equities early on.
Does a good first-year return guarantee a safe retirement?+
No — while a strong start reduces sequence risk relative to a bad start, later downturns can still matter, especially if the portfolio has grown smaller relative to ongoing withdrawal needs; sequence risk is highest early on but isn't eliminated once the first year is favorable.