What If The Market Crashed The Year I Retire?

Added: 2026-05-25

[00:00:00]There is a risk in retirement you might not have considered. It has a name and it can wipe out your portfolio. It's called sequence of return risk and here's the simple version. Two retirees both average 7% annual returns over 30 years. Same average, same starting balance, but one of them gets the bad years at the beginning of their retirement and the other gets them at the end. The one who got the bad years first runs out of money. The one who got them in the last few years leaves money to their kids. Same average return, completely different outcomes just because of timing. I think the defense against this doesn't need to be complicated. You could keep two to five years of expenses in safer investments before you retire. So, when the market does drop, you're not selling stocks at a loss to pay your grocery bill. You're pulling from that safe bucket and letting the rest of it recover. I believe this is one of the most important concepts in retirement planning. Yet, some retirees may not have had this explained to them. From an income and return standpoint, the first five years of retirement could matter more than the next 20. Hit follow for more retirement concepts you may not have heard from your advisor.