The Great Bear Bryant once said, “Offense sells tickets, but defense wins championships.” Eliminating Losses is the Key to Wealth Creation! The Sequence of Returns (Critical to Your Retirement Success) The sequence of returns refers to the order in which investment gains and losses occur—and it can make or break your retirement. When you are in the accumulation phase (saving years), the order of returns doesn’t matter much. Over time, the averages work themselves out. But when you begin withdrawing money in retirement, the sequence of returns can have a devastating impact. Withdrawals amplify losses because compounding works against you if those losses come early in retirement. Example: Same Average Return, Two Very Different A family starts retirement on January 1, 1990 with $500,000. Over the next ten years, the S&P 500 averaged 10% annually. They withdrew $30,000 each year. Result: By December 31, 1999, their account grew to $770,936. Scenario #2: A family starts retirement on January 1, 2000 with the same $500,000. The S&P 500 averaged –2.73% annually over the next decade. They withdrew the same $30,000 each year. Result: By December 31, 2009, their account had dwindled to $120,654. Outcomes Scenario #1:
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