Calculator Inputs
Enter your portfolio values, withdrawal settings, and a return sequence. The tool reorders the same return set to reveal sequence risk.
Example Data Table
This sample shows how the same average return can produce very different portfolio outcomes when negative years happen early.
| Year | Sample Return | Inflation-Adjusted Withdrawal | Illustrative Note |
|---|---|---|---|
| 1 | -22.00% | $50,000.00 | Large early decline reduces the capital base immediately. |
| 2 | -8.00% | $51,250.00 | Another negative year amplifies withdrawal pressure. |
| 3 | 18.00% | $52,531.25 | Recovery starts from a smaller portfolio. |
| 4 | 12.00% | $53,844.53 | Good returns help, but lost capital may not fully recover. |
| 5 | 9.00% | $55,190.64 | Withdrawal growth keeps increasing the stress. |
| 6 | 14.00% | $56,570.41 | Late gains are strongest when the portfolio still survives. |
Formula Used
Inflation-adjusted withdrawal
Withdrawaly = Initial Withdrawal × (1 + Inflation Rate)(y - 1)
Net return after fees
Net Returny = Annual Returny − Fee Drag
End-of-year withdrawal mode
Ending Balancey = Starting Balancey × (1 + Net Returny) − Withdrawaly
Start-of-year withdrawal mode
Ending Balancey = (Starting Balancey − Withdrawaly) × (1 + Net Returny)
The simulator keeps the same return values but changes their order. That isolates the effect of sequence alone.
Worst-first sorts returns from lowest to highest. Best-first sorts them from highest to lowest. Random shuffles estimate a wider range of possible paths.
How to Use This Calculator
- Enter your starting portfolio and first-year withdrawal amount.
- Choose the number of years you want to test.
- Set inflation and fee drag so withdrawals and returns reflect real-life pressure.
- Choose whether withdrawals happen at the start or end of each year.
- Paste a comma-separated list of annual returns.
- Set Monte Carlo shuffles to test many randomized orderings of that same return list.
- Run the simulation and compare original, worst-first, best-first, and median shuffled outcomes.
- Use the CSV or PDF download buttons to save the results.
Frequently Asked Questions
1) What is sequence of returns risk?
It is the danger that poor returns arrive early, when withdrawals are already shrinking the portfolio. Even if the long-run average return stays unchanged, early losses can cause the balance to deplete much faster.
2) Why does return order matter if the average return is the same?
Withdrawals remove capital before it can recover. When bad years happen first, later gains compound on a smaller base. The average return may match another path, but the ending balance can be dramatically lower.
3) When is sequence risk most dangerous?
It is usually highest near retirement and during early drawdown years. That is when the portfolio is large, withdrawals begin, and a major decline can permanently damage future compounding capacity.
4) Does inflation make sequence risk worse?
Yes. Rising withdrawals increase the annual cash drain. If inflation-adjusted spending keeps climbing during or after weak markets, the portfolio may have less room to recover from early losses.
5) What is the difference between start-of-year and end-of-year withdrawals?
Start-of-year withdrawals are harsher because money leaves the account before returns are earned. End-of-year withdrawals usually produce a slightly stronger outcome because the full balance remains invested longer.
6) Why does the calculator use random shuffles?
Random shuffles keep the same set of returns but reorder them many times. That helps show the distribution of ending balances caused only by sequencing, not by changing the average return itself.
7) What does the survival rate mean?
The survival rate is the percentage of shuffled paths that still have money left at the end of the selected period. A lower rate suggests your withdrawal plan may be fragile.
8) Is this calculator financial advice?
No. It is an educational planning tool. It helps illustrate sequencing effects, but it does not replace personalized advice, tax planning, investment selection, or professional retirement modeling.
What the Results Mean
Original order: Uses the returns exactly as entered.
Worst-first: Moves negative years to the front and usually shows the most stressful drawdown path.
Best-first: Moves strong years to the front and often produces the highest ending balance.
Median shuffle: Represents one middle-of-the-pack randomized ordering.
Sequence gap: Measures how much ending wealth changed even though the average return stayed the same.