Current as of 17 Feb 2026. Always verify current year rates.
How do I manage sequence risk?
Short answer:
Sequence risk is the risk of poor investment returns early in retirement, when you’re also withdrawing money. Early losses can be harder to recover from, because withdrawals lock in some of the fall. You can’t control markets, but you can control your spending rule, keep a buffer for planned expenses, and set review points so you adjust calmly after big moves.
Key takeaways
Early downturns can do more damage than later downturns
A steady spending rule plus flexibility beats reactive changes
Buffers and staged spending can reduce forced selling
Avoid making big allocation changes in the heat of the moment
Review after major market moves and adjust within guardrails
Why this matters
Sequence risk is one of the biggest reasons retirees feel anxious about spending. Having a plan for ‘what we do after a fall’ helps protect confidence and helps you avoid selling at the worst time.
Mini-plan (3-4 steps)
- Know your essential spending and how you’ll fund it through a downturn.
- Hold an appropriate liquidity buffer for near-term needs (discuss ranges with an adviser if unsure).
- Set a guardrail: if markets fall sharply, reduce discretionary spending first and reassess.
- Schedule a check-in after big market moves to review withdrawals and timeframe.
Related questions
Sources (so you can verify)
Disclaimer: Information provided is general in nature and does not constitute personal financial advice. You should consider seeking advice from a licensed financial planner before making any financial decisions.
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