A -20% Market Drop in Year 1 of Retirement Reduces Portfolio Life by 7 Years

Why the first 5 years determine whether your money lasts 30 years or runs out early

The Details

Two identical portfolios with identical lifetime returns can have opposite outcomes based solely on when the losses occur. A retiree in 2008 with a 60/40 portfolio ran out of money 9 years earlier than one retiring in 2003, despite experiencing the same average returns over 30 years.

What this means for you

Retirement decisions compound — getting one of these details wrong can cost tens of thousands of dollars over a retirement. The good news: most of these mistakes are completely avoidable if you understand how the rule actually works.

Next step

If you want to see how this applies to your specific situation, take the free Retire Ready Score — a 2-minute assessment that scores your current plan across income, taxes, healthcare, and protection.