The 4% rule says your plan works. History says it depends on which year you retire.

Two retirees with identical portfolios, identical withdrawal rates, and identical average returns can end up with wildly different outcomes — one dies wealthy, the other runs out — entirely based on the SEQUENCE of returns in their first decade. This tool runs your plan against four real historical bad starts and shows you which would have killed it.

Starting Portfolio $1,000,000

Annual Withdrawal $40,000

Years in Retirement 30

Stress Test Result

4 of 4 scenarios survived

Your withdrawal rate: 4.0% of portfolio

Max Safe Withdrawal

$42,000 / year

survives all 4 historical bad starts

Baseline · Smooth 6% real / year

Survived

—

If real returns were a smooth 6% every year (S&P 500 long-run real geometric average, 1926–2023). Textbook assumption — almost never how reality unfolds.

2000 Tech Crash Start

—

Real S&P 500: −11%, −13%, −23%, +26%, +6% in years 1–5. Years 6–10 include the GFC hitting in year 9. The dot-com unwind colliding with the next crisis.

2008 GFC Start

—

Real S&P 500: −37%, +24%, +13%, 0%, +13% in years 1–5. Years 6–10: strong recovery (+30%, +12%, +1%, +11%, +19%). Of the three crises, GFC retirees recovered fastest.

1973 Stagflation Start

—

Real S&P 500: −22%, −34%, +29%, +18%, −13% in years 1–5. Years 6–10 stay choppy as high inflation drags real returns. The grimmest decade for US retirees in modern history.

* Returns are real S&P 500 total returns (inflation-adjusted, dividends reinvested, sourced from Damodaran/NYU Stern). Withdrawals are constant in today's dollars (matches the Trinity Study 4% rule definition). After year 10 each scenario reverts to a 6% real average — the S&P 500 long-run real geometric average (1926–2023, Ibbotson/Damodaran). Assumes 100% equity — a 60/40 stock/bond mix would smooth drawdowns and raise the safe rate. Doesn't model taxes, fees, or dynamic-withdrawal rules. "Max Safe Withdrawal" is the highest annual draw that survives all four scenarios for your chosen time horizon. Educational only — not investment advice.

Why this matters

Sequence risk is why "average return" lies to you in retirement.

During accumulation (when you are contributing), bad years actually help — you buy more shares at lower prices, and average cost in. During withdrawal (when you are pulling from the portfolio), bad years hurt twice: the market drops AND you are selling shares to fund spending, locking in losses you would have otherwise ridden out.

Average return assumes a smooth path. Real markets do not deliver smooth paths. They deliver lumpy ones. The lumps that come early in retirement can be terminal.

Five defenses that actually work: (1) hold 2–3 years of cash and short bonds so you do not sell equities into a downturn, (2) use a dynamic withdrawal rule (Guyton-Klinger guardrails) instead of a fixed 4%, (3) build a "bond tent" — heavier fixed income for years -5 to +5 around retirement, then de-risk back into equities, (4) delay Social Security to 70 as longevity insurance, (5) stay flexible on spending in early bad years — the most powerful lever you have, by a wide margin.

Sequence risk is invisible until you live it. Plan for it before you face it.

If you are within 5 years of retirement, this is the most important conversation you can have.

Book a 30-min Call → Investment Management All Tools