Interactive lesson / retirement

Why Return Order Matters in Retirement

Two portfolios can experience the same returns and the same long-term growth rate, yet finish very differently when money is being spent along the way.

Starting portfolio $1,000,000
Same 30 returns 1995 to 2024
Same return CAGR 8.10%
Only difference Return order

Starting point

Poor returns early  
Poor returns late  
Path A

Poor returns early

Ending balance
$0
Full spending years
0 of 30
Total amount spent
$0
Lowest balance
$0
Path B

Poor returns late

Ending balance
$0
Full spending years
0 of 30
Total amount spent
$0
Lowest balance
$0

Without spending

Return order does not change the ending value. Multiplication produces the same result whether the best years arrive first or last.

With spending

Early losses leave less money available for the recovery. Withdrawals then remove a larger share of what remains.

Not a forecast

The sorted paths are intentionally extreme. They isolate sequence risk so you can see the mechanism before testing more realistic market histories.

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