Sequence Risk vs. Investment Risk
A lot has already been written about the sequence of returns risk confronting retirees. But the full implications of sequence risk have not been completely internalized. Retirees become more vulnerable to investment volatility, because as they withdraw from their portfolio they may find themselves locking in investment losses. It’s the opposite effect from dollar cost averaging.
Are market valuations the most important factor for retirement income strategies?
The question remains as to whether historical withdrawal rates provide sufficient insight about what can reasonably be expected to work for more recent retirees.
