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Understanding Sequence of Returns Risk

A plain-language introduction to why the order of market returns may matter during retirement withdrawals.

Sequence of returns risk refers to the possibility that poor market performance early in retirement may have a larger effect when withdrawals are being taken from a portfolio.

The concept is important because two investors may experience the same average return over time but have different outcomes depending on the order of returns and the timing of withdrawals.

Educational use only.

This material is provided for general educational purposes and is not individualized investment, tax, legal, insurance, or financial advice.