Sequence Of Returns Risk Calculator

Background.

Use Sequence Of Returns Risk Calculator when you need to isolate the effect of ordering the same annual returns around fixed beginning-of-year withdrawals. Sequence risk arises because withdrawals remove more shares after early losses, so identical average returns can produce different ending wealth. Here the arithmetic follows “apply the same five annual returns in entered and reverse order with equal beginning-of-year withdrawals to isolate sequence risk,” rather than silently mixing alternatives.

The editable entries are starting portfolio, beginning-of-year withdrawal, year 1 return, year 2 return, year 3 return, year 4 return, year 5 return. Use values from the document or measurement that governs this sequence of returns risk question; the defaults are only the worked fixture below. The most consequential input mistake would be to ignore that five entered returns illustrate path dependence but are not a retirement success probability.

Vanguard, Principles for Retirement Income; withdrawal rates, market paths and portfolio-depletion risk documents the convention or governing rule used here. The sequence of returns risk output is a transparent scenario under those facts: it does not manufacture an unentered market price, professional determination, carrier quote, legal eligibility finding or locally adopted code value.

What is sequence of returns risk calculator?

Sequence Of Returns Risk is the relationship behind this decision: sequence risk arises because withdrawals remove more shares after early losses, so identical average returns can produce different ending wealth. On this page it means apply the same five annual returns in entered and reverse order with equal beginning-of-year withdrawals to isolate sequence risk. Five entered returns illustrate path dependence but are not a retirement success probability; that is the line between the reported quantity and a broader retirement analysis.

How to use this calculator.

1. 01Confirm that “apply the same five annual returns in entered and reverse order with equal beginning-of-year withdrawals to isolate sequence risk” matches the sequence of returns risk convention you need.
2. 02Replace the fixture values for starting portfolio, beginning-of-year withdrawal, year 1 return, year 2 return, year 3 return, year 4 return, year 5 return with dated values from the governing record.
3. 03Keep all currencies, measurement units and time periods on the same basis before calculating.
4. 04Read ending balance under entered return sequence together with this boundary: Five entered returns illustrate path dependence but are not a retirement success probability.

The formula.

The calculation uses apply the same five annual returns in entered and reverse order with equal beginning-of-year withdrawals to isolate sequence risk. In this sequence of returns risk model, the entered terms are starting portfolio, beginning-of-year withdrawal, year 1 return, year 2 return, year 3 return, year 4 return, year 5 return. Sequence risk arises because withdrawals remove more shares after early losses, so identical average returns can produce different ending wealth, which is why the relationship is presented under this name rather than as a universal alternative. Five entered returns illustrate path dependence but are not a retirement success probability. Calculations keep full decimal precision through the relationship and round only the returned display values.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Vanguard, Principles for Retirement Income; withdrawal rates, market paths and portfolio-depletion risk. Retrieved 2026-08-07. access: open unless marked otherwise.
2. [2]U.S. Securities and Exchange Commission. Investor.gov: Assessing your risk tolerance. Retrieved 2026-08-07. independence: secondary-check; access: open.
3. [3]U.S. Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements. Retrieved 2026-08-07. independence: primary; access: open.