Freedom Isn't Free6d ago

Sequence of Returns Risk: Why the 4% Rule Can Still Fail

Two retirees. Identical pots. Identical 4% withdrawals. One ends with millions, the other is broke at 78. The only difference between them is the year they retired.

#4Rule #Withdrawal #SequenceRisk #UKPersonalFinance

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Sequence of Returns Risk: Why the 4% Rule Can Still Fail

Sequence of returns risk explained: why reaching your FIRE number is just the start, and how withdrawal mechanics can break a portfolio that should have lasted.

Freedom Isn't Free
Fabio CapelaApr 11, 2025
Recovery math: A 40% portfolio loss requires a 67% gain just to break even. When you're withdrawing 4% annually, that required recovery gain jumps to 79%. This asymmetry is why protecting against major drawdowns is crucial for retirement portfolios. #FinancialMath #SequenceRisk #Retirement