Sequence of Returns Risk and its Impact on Retirement Income

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Sequence of Returns Risk and its Impact on Retirement Income

Investors continually seek to grow their money to the greatest amount possible, eyeing a substantial retirement nest egg. However, many retirees find themselves with significant savings but unable to effectively utilize them. Stock market volatility, beneficial to working investors who can buy in at lower prices, can adversely affect retirees making systematic withdrawals from their portfolios. 

Bryan Schod, CFP, CDFA, Managing Associate at Luttner Financial Group, highlights a critical but often overlooked aspect of retirement planning: sequence of returns risk.

“I’ve been working with pre-retirees for a while now, and it’s funny how you tend to hear the same things over and over,” Schod notes. “Many believe that if the market averages 8%, they can simply withdraw 7% annually and never run out of money. If only it was so easy.” 

The reality is that the stock market does not consistently grow at a steady rate. While average returns might hover around 8%, the actual annual returns can vary significantly, impacting retirees’ portfolios differently.

Schod illustrates this with historical data: “From 1970 to 1999, the S&P 500 averaged a return of 14.84%. One might think a retiree could withdraw 10% each year and sustain their portfolio. However, withdrawing 10% annually from a $1,000,000 portfolio starting in 1970 would result in depletion by the 14th year, despite the high average returns.”

The reason lies in the uneven annual returns. For example, with a modest 3.99% return in 1970, a $1,000,000 portfolio drops to $935,910 after a 10% withdrawal. The following year’s growth is based on the reduced amount, compounding the impact of early losses. 

Conversely, if one reversed the order of returns, starting withdrawals in 1999 and going backward to 1970, the portfolio would not only remain intact but grow over 30 years. This stark difference underscores the importance of considering sequence of returns risk in retirement income planning.

“My focus is on helping pre-retirees and retirees develop comprehensive retirement income plans,” Schod emphasizes. “These plans account for sequence of returns risk, tax risk, and market risk, often ensuring guaranteed income for life.”

To schedule a meeting with Bryan Schod and his team, call the office at 203-577-8693, email [email protected], or visit and schedule an appointment on the website at

About Luttner Financial Group:

Luttner Financial Group is dedicated to providing personalized financial planning services, specializing in retirement planning, investment management, and risk assessment to help clients achieve their financial goals and secure their financial future. 

For more information, please contact Bryan Schod at 203-577-8693 or [email protected].

Bryan A Schod is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 244 Boulevard of the Allies; Pittsburgh, PA 15222. Phone: (412) 391-6700. Securities products and advisory services offered through PAS, member FINRA, SIPC. Mr. Schod is also a Financial Representative of The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Luttner Financial Group and Lifetime Financial Growth are not affiliates or subsidiaries of PAS or Guardian and are not registered in any state or with the U.S. Securities and Exchange Commission as a registered investment advisor. AR Ins. License #19180742; CA Ins. License #4049097. 2024-171520 Exp. 03/26 

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Company Name: Luttner Financial Group
Contact Person: Bryan Schod
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Phone: 203-577-8693
Country: United States