Retirement Income Planning
Retirement Income & Sequence Risk
Two people can retire with the exact same portfolio and withdraw the exact same amount — and get very different outcomes, purely because of what the market did in their first few years. See how much a floor-and-cap bucket changes the odds.
Why does the order of returns matter?
While you’re saving, the order of good and bad years doesn’t change your ending balance — only the average matters. The moment you start withdrawing a fixed dollar amount every year, order suddenly matters a great deal: a market drop early in retirement forces you to sell a larger share of a shrinking portfolio, leaving less left over to recover when the market eventually turns around. That’s sequence-of-returns risk. Putting part of the portfolio in a floor-protected bucket like an FIA can blunt those early bad years.
Build your scenario
1975–2025, S&P 500 actual history — adjust freely.
100% market outcome
$1,036,830
26 yr horizon survived
Your blend outcome
$2,496,037
26 yr horizon survived
Years of runway gained
Both survived
26 yr horizon
Horizon shown
26 yrs
2000–2025 (limited by available data)
Goal-seek
Goal: make the money last the whole horizon shown above, at this withdrawal rate and this retirement year.
Set your inputs, then find the minimum FIA allocation needed to survive this scenario.
Retirement income from $1,000,000, starting 2000
Withdrawing $45,000/yr (4.5% of the starting portfolio). Hover any point to see that year’s balances, return, and withdrawal.
Year-by-year data
Every year’s return, credited rate, withdrawal, and both running balances.
Important information
Order matters here in a way it doesn’t while you’re purely saving: with no withdrawals, compounding is commutative, so the same set of annual returns produces the same ending balance no matter what order they land in. Add a fixed annual withdrawal and that stops being true — a loss taken early, while you’re also pulling money out, permanently shrinks the base left to recover and compound. Both lines above withdraw the exact same dollar amount each year (a fixed percentage of the starting portfolio, not recalculated annually), drawn proportionally from whichever bucket — market or FIA — currently holds the larger share of what’s left.
1996–2025 returns are derived from SPY year-end pricing, as on the Growth tab. 1975–1995 total returns are from NYU Stern's historical S&P 500 return series; price-only returns for that stretch (used for FIA crediting) are estimated by subtracting the historical average dividend yield for each year, since a clean separate price series wasn't available. A reasonable approximation, not exact.
This is an educational illustration, not a projection, quote, or offer. Real withdrawals also involve taxes, required minimum distributions, and fees, none of which are modeled here. Actual indexed annuity contract terms — participation rates, caps, spreads, floors, and fees — vary by carrier and product and can change annually. Past S&P 500 performance does not predict future results.