Evaluating The Impact of Sequence Risk On Retirement Income

Evaluating The Impact of Sequence Risk On Retirement Income

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Another way to understand how sequence risk amplifies investment risk is to consider how historical withdrawal rates would have varied based on the actual sequence of historical returns and the average compounded return over each thirty-year period. To illustrate this, we will first look at the rolling compounded returns over thirty-year periods for the same 50/50 portfolio in Exhibit 1.

 

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