Hozamsorozat Kalkulátor

In this scenario, a $1,000,000 portfolio faces immediate market headwinds at the start of retirement, experiencing returns of -15%, -10%, and +5% in the first three years while systematically withdrawing $50,000 annually. Because assets must be liquidated at a loss to meet the withdrawal demand, the capital base is severely eroded. Even with strong positive returns later in the decade, the portfolio never recovers and is completely depleted by Year 17, demonstrating the destructive power of early negative sequences.

Using the exact same returns as the first example but in reverse order (+15%, +10%, -5%, etc.), the portfolio benefits from strong early compounding. The initial $1,000,000 capital base grows rapidly in the first few years, easily absorbing the systematic $50,000 withdrawals. When the market downturns eventually occur later in the sequence, the portfolio's expanded size insulates it from permanent damage, leaving a terminal balance of over $850,000 after 20 years. This highlights how sequence, rather than average return, dictates survival.

This scenario models a corporate pension fund with $5,000,000 in assets and an immediate $300,000 annual payout obligation (a 6% initial withdrawal rate). If the fund encounters flat-to-negative returns (-5%, -2%, +3%) during the initial years, the double impact of high payouts and negative compounding puts the fund on a highly vulnerable trajectory. The calculator demonstrates that a cash buffer of 3 years' expenses is required to protect the equity portion of the pension from forced liquidation.

This example simulates a university endowment fund starting with $10,000,000 and a 4% spending rule ($400,000 annually, adjusted at 3% inflation). Under a highly volatile sequence of returns (+15%, -12%, -8%, +20%), the calculator demonstrates how rising inflation-adjusted withdrawals compound sequence risk during market downturns. The output helps trustees determine if a temporary spending freeze or a flexible payout rule is necessary to preserve the purchasing power of the endowment's principal.

Extreme Volatility with Net-Zero Geometric Growth

When a portfolio experiences extreme positive and negative swings that result in a net-zero geometric return over time, systematic withdrawals will still deplete the portfolio rapidly. This occurs because withdrawals during the negative swings permanently reduce the share count, preventing the subsequent positive swings from fully restoring the portfolio's dollar value.

Immediate High-Yield Market Crashes at Retirement Onset

If a severe market crash (e.g., -30%) occurs in Year 1 of retirement, the safe withdrawal rate must be immediately recalculated. Failing to adjust withdrawals downward after a massive initial hit locks in a high probability of portfolio ruin within 15 years, regardless of how strongly the market recovers in later decades.

Variable Withdrawals Tied to Portfolio Performance

If withdrawals are structured as a percentage of the remaining portfolio value rather than a fixed dollar amount, sequence of returns risk is mathematically eliminated, but lifestyle risk is introduced. The portfolio will never technically hit zero, but the annual income stream may fluctuate wildly, making this strategy difficult for retirees with fixed overhead costs.