Sequence of Returns Risk Calculator
What if a crash hits right after you retire? Place historical downturns on your timeline and stress-test your plan.
Baseline uses a constant 8.4% annual return. Stressed applies historical crash return sequences at the years you specify, then resumes the base return. Withdrawals are inflation-adjusted annually. All calculations run in your browser.
How This Works
The baseline projection assumes a constant annual return equal to your selected allocation's historical mean — no crashes, no surprises. The stressed projection replaces specific years with actual historical crash returns (e.g., the GFC's −37% in 2008), then resumes the base return afterward.
Withdrawals are inflation-adjusted each year using the rate you set. If the portfolio hits zero in the stressed scenario, the depletion year is recorded and subsequent years show a zero balance.
The red shaded regions on the chart mark the years where crash returns are applied. The gap between the green (baseline) and red (stressed) lines represents the permanent cost of poor return sequencing.
All calculations run entirely in your browser. We don't store or transmit any of your financial data.
Frequently Asked Questions
What is sequence of returns risk?
Sequence of returns risk is the danger that poor market returns early in retirement will permanently damage your portfolio — even if long-run average returns are fine. A big loss in year 1 or 2 forces you to sell more shares at depressed prices to cover withdrawals, leaving fewer shares to recover when markets rebound.
How does this calculator work?
The calculator runs two deterministic projections. The baseline assumes a constant annual return equal to your allocation's historical mean. The stressed projection replaces specific years with a historical crash's actual annual returns, then resumes the base return. The difference shows the cost of bad timing.
Can I add multiple downturns?
Yes. Use the Add downturn button to stack multiple events on your timeline. You can model a double-dip scenario — for example, a dot-com crash near retirement followed by a GFC-style crash a few years later. The first matching event wins if events overlap.
What are the downturn profiles based on?
Each profile uses approximate S&P 500 annual total returns for the historical period. They are illustrative, not exact, and are designed to show the shape and duration of each crisis rather than a precise replay. Real portfolios also include bonds, which typically cushion equity drawdowns.
Why is early-retirement sequence risk worse than late-retirement?
Early in retirement, your portfolio is at its largest and withdrawals represent the smallest percentage — but a crash forces you to sell at the worst time. This is sometimes called reverse dollar-cost averaging: instead of buying more shares cheap, you're selling more shares cheap. The math is asymmetric: a 50% loss requires a 100% gain to recover, and withdrawals prevent full recovery.