For a $1.8m Retiree, Timing Matters More Than Total Savings

"In April 2025, SPY dropped to $548.62 during sharp declines. By January 20, 2026, it recovered to $677.58, a 23.5% gain from that low. For our $1.8 million retiree, this timing difference translates to roughly $342,000 in portfolio value. Someone who retired during April turbulence would have started with an effective portfolio of about $1.46 million. Someone retiring today starts with the full $1.8 million."

"The damage compounds when withdrawals begin. Following the 4% rule means withdrawing $72,000 annually. When markets drop early in retirement, you're forced to sell more shares to generate that $72,000, permanently reducing the asset base that can recover when markets rebound. As Schwab notes, "Not only does that drain your savings more quickly, but it also leaves you with fewer assets that can generate growth and returns during potential future recoveries.""

A 62-year-old retiree with $1.8 million faces significant sequence-of-returns risk because retiring near market downturns can permanently erode portfolio sustainability. A hypothetical SPY decline to $548.62 in April 2025 followed by a recovery to $677.58 by January 20, 2026 represents a 23.5% swing, translating to about $342,000 of portfolio value for a $1.8 million account. A retiree who started at $1.46 million and withdrew $72,000 under the 4% rule would deplete assets more and have less capital to benefit from subsequent recoveries. Building spending flexibility can mitigate the danger of early-retirement losses.

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