The order returns arrive in matters more than the average. A retirement that started in 1973 looks nothing like one that started in 1990. Stress-test yours against three of the worst sequences in modern history.
Starting balance and annual spend at the moment of retirement.
Survived, just. Margin of safety is thin.
Marginal: survived this run, but a worse sequence (or higher spend) could break it. Build a cash buffer to avoid forced selling in down years.
Illustrative figures only. Historical returns are US-centric (S&P 500 total return and long-term US Treasury); past performance is no guarantee. For your specific situation, consult a qualified adviser.
Worth runs every retirement plan against the worst sequences in modern history, surfaces where it breaks, and suggests the bond-tent and cash-buffer levers that make it solid. Join the waitlist.
Three main levers: more bonds in the first five to ten years of retirement (a glide-path or bond tent), maintain two to three years of cash buffer to avoid selling equities during drawdowns, and stay flexible on withdrawal rate (skip the inflation adjustment in years when the portfolio is down). The bond tent and cash buffer are the most evidence-based.
For equity-heavy retirees, yes. From 2000 to 2012, US equities produced roughly zero per cent real return, a flat decade. Combined with four per cent withdrawals each year, a one-hundred-per-cent equity portfolio drew down significantly over the period with no growth to offset it. Balanced portfolios fared better because bonds had a strong run.
Monte Carlo assumes year-to-year returns are independent, which they are not. Real history has clusters of bad years (the worst of which are these three windows). Stress testing against actual sequences captures the autocorrelation that random simulations miss. Both methods have value; this one is more honest about tail outcomes.
Current high valuations and elevated bond yields create a mixed picture. Some commentators argue we are entering another low-return decade for equities. Others note that elevated bond yields make balanced portfolios more attractive than at any point in years. Stress-testing against historical analogues is the best way to make the discussion concrete.