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
03 / Compare the paths
Starting point
Poor returns early
Poor returns late
Poor returns early
- Ending balance
- $0
- Full spending years
- 0 of 30
- Total amount spent
- $0
- Lowest balance
- $0
Poor returns late
- Ending balance
- $0
- Full spending years
- 0 of 30
- Total amount spent
- $0
- Lowest balance
- $0
04 / What the comparison shows
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.