By Yvonne Marsh, CFP®, CPA

Imagine it’s your first day of retirement and you leisurely get your first cup of coffee, flip on the news, and ugh! The markets are dropping! You end up 15% down in your first year of not working. Your $500,000 nest egg is now worth $425,000 and will need an almost 18% rebound to even get back where you started. Maybe you won’t book that cruise you’ve been thinking about after all.

But what if the opposite were true? Everything is glorious and the markets boom, up 15% for the year. Hooray! Your $500,000 is now worth $575,000. Caribbean cruise, here we come!

Well, which is it going to be? Markets up or down? Can you predict that? I sure can’t. Market corrections EARLY in your retirement years, coupled with ongoing withdrawals, can dramatically decrease the ability of your money to last your lifetime. It’s called Sequence of Returns investment risk, and few investment professionals talk about it or plan for it.

Markets don’t give you the exact same rate of return every year; they give you up and down returns that work out to an average. If the downs come early in retirement, that can spell trouble. Your money won’t last as long as an average return might predict.

What’s a retiree to do? Structure your investments according to time and purpose. For assets needed earlier in retirement, invest conservatively. For assets needed later, invest with a growth focus. “Accumulation” advisors simply invest by account type: IRAs one way and brokerage accounts another way. This simply does not mitigate Sequencing Risk, and it is a “must do” when you’re within five years of starting withdrawals, entering the “distribution” phase of life. 

Secondly, have enough guaranteed income to meet your lifestyle needs. This gives you the flexibility to wait out a down market. If Social Security isn’t enough to do that and you don’t have a pension, create your own pension with a highly rated insurance company. Many new guaranteed income opportunities exist today that didn’t exist 10 years ago.  

Your early retirement years define your later retirement years – all due to the unknowable Sequence of Returns risk. Take the steps today to protect your tomorrow. Have a question? Submit it on our website.  Or give me a call to learn more.

Marsh Wealth Management, LLC
Fiduciary Registered Investment Advisor
504 Ebenezer Road
Knoxville, TN 37923

Financial Planning & Investment Advisory Services are offered through Marsh Wealth Management, LLC (“MWM”), an independent investment advisor registered with the state of Tennessee. Yvonne Marsh is an Investment Advisor Representative of MWM in the state of Tennessee. Marsh Professional Group, LLC is a TN registered public accounting firm and a separate legal entity from MWM. For a detailed discussion of MWM and their investment advisory fees, see the firm’s Form ADV on file with the SEC at