In retirement, volatility is the price of better returns
https://www.telegraph.co.uk/business/2026/04/23/in-retirement-volatility-is-the-price-of-better-returns/
Tom Stevenson:
The issue of a market downturn in early retirement is called “sequencing risk”. It refers to the way in which the same set of annual investment returns can have a vastly different impact on your retirement, depending on the order in which they occur.
Two investors drawing an income from their pension pots can end up with two very different amounts of money if they experience the same annual returns but in a different sequence.
An investor who starts their retirement with a few bad years in the market will have a much worse outcome than one who starts with a few good ones, even if the performances are subsequently reversed. “Bad then good” is much more damaging than “good then bad” when you are simultaneously taking money out of your savings to live on.
https://www.telegraph.co.uk/business/2026/04/23/in-retirement-volatility-is-the-price-of-better-returns/
Tom Stevenson:
The issue of a market downturn in early retirement is called “sequencing risk”. It refers to the way in which the same set of annual investment returns can have a vastly different impact on your retirement, depending on the order in which they occur.
Two investors drawing an income from their pension pots can end up with two very different amounts of money if they experience the same annual returns but in a different sequence.
An investor who starts their retirement with a few bad years in the market will have a much worse outcome than one who starts with a few good ones, even if the performances are subsequently reversed. “Bad then good” is much more damaging than “good then bad” when you are simultaneously taking money out of your savings to live on.