Same Returns. $4,000 Less for Retirement?

Episode notes and examples

Try the FREE Return-order calculator and download your scenario as a CSV: https://fiscalnonsense.com/calculators/return-order/

Same starting balance, same pair of returns and same withdrawals: why does one fictional retirement pot finish at $74,000 while the other reaches $78,000? See how the order of returns interacts with spending.

Our two-year example starts with $100,000. Each path receives one −20% year and one +20% year in opposite orders. A $10,000 withdrawal happens at each year end, after the return. Both withdraw $20,000 in total. Without withdrawals, both paths finish at $96,000. These are hypothetical numbers, not forecasts or a recommended withdrawal rate.

The model excludes taxes, fees, inflation, other income and portfolio changes. Reserves and spending flexibility have trade-offs; no single reserve size or spending rule guarantees success. Local rules and personal circumstances matter.

Which part of a spending plan could you change after a market fall: timing, amount, or neither?

WATCH NEXT: Five Types of FIRE — compare different routes to financial independence. https://youtu.be/9CNzxXKLkT4

CHAPTERS 00:00 Same returns, different result 00:39 Loss first versus gain first 01:33 Why withdrawals change the result 02:09 The no-withdrawal control 02:48 Test your spending plan

SOURCES https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk https://www.investor.gov/additional-resources/general-resources/publications-research/info-sheets/beginners-guide-asset

General financial education, not individualized investment, tax or legal advice. AI-generated character animation and voices; original script and locally animated calculations. https://fiscalnonsense.com #RetirementPlanning #PersonalFinance #FiscalNonsense