There are many risks that can threaten your retirement security. In this article, I want to highlight one market risk that often flies under the radar yet has the potential to cause devastating damage to your retirement.

Let’s look at a real-world example.

Mark’s Retirement Plan

Mark retired at age 65 on December 31, 1999, with $1,000,000 in retirement savings. Like many investors, he believed in the power of index investing and allocated his entire portfolio to an S&P 500 index fund.

To cover his living expenses, Mark needed a reliable withdrawal strategy. While he was familiar with the widely recommended 4% rule, he felt confident he could safely take out a bit more. He opted for a 4.5% withdrawal rate.

That meant his first withdrawal on January 1, 2000, was $45,000. To maintain his purchasing power, he planned to increase his withdrawals by 3% each year to keep pace with inflation. So, on January 1, 2001, his withdrawal rose to $46,350, and the pattern continued each year.

Mark’s goal was simple: ensure his savings would last 25 years, carrying him through retirement until age 90 in 2025.

How long do you think Mark's money would last?

The Result

Despite starting with a $1 million portfolio, Mark’s savings were fully depleted just 19 years later—well before he reached his target age of 90. By age 84, his account balance had dropped to zero.

Mark's Portfolio Year-End Balance

Year	S&P500 Return	Year-End Value
1:2000	-9.1%	868,095
2:2001	-11.89%	724,040
3:2002	-22.1%	526,837
4:2003	28.68%	614,658
5:2004	10.88%	625,375
6:2005	4.91%	601,352
7:2006	15.79%	634,089
8:2007	5.49%	610,517
9:2008	-37%	348,713
10:2009	26.46%	366,732
11:2010	15.06%	352,378
12:2011	2.11%	296,208
13:2012	16%	269,177
14:2013	32.39%	268,874
15:2014	13.69%	228,298
16:2015	1.38%	160,373
17:2016	11.96%	98,705
18:2017	21.83%	29,637
19:2018	-4.38%	0
20:2019	31.48%	0

In fact, Mark’s investment account was fully depleted in 2018, when he was just 83 years old. To make matters worse, his health began to decline rapidly, leading to a sharp increase in medical expenses and an unplanned need for long-term care. Mark found himself in a financially vulnerable position.

In a 2021 article published in Retirement Management Journal, the authors—Rene Martel, Jennifer Gongola, Sean Klein & Avi Sharon—pointed out that many affluent and high-net-worth retirees exhibit overconfidence in their retirement savings without having a reliable plan for withdrawing assets.

The Lesson

This example highlights a critical but often overlooked risk in retirement: sequence-of-returns risk. In retirement, it is not just your average rate of investment returns that matters, but also the order of those returns. Market losses, when combined with ongoing withdrawals, can significantly amplify the impact of market risk and dramatically shorten the life of your portfolio. Mark’s story also reinforces a broader truth: while stocks offer strong long-term growth potential, they are ill-equipped to manage longevity risk on their own. That is why it is essential to work with a qualified financial adviser before retiring. Together, you can craft a written retirement plan that includes both investment and risk management strategies and revisit it regularly to adapt to changing circumstances. You want to enjoy your wealth as much as possible today, while also ensuring you have enough to live comfortably in the future—despite the risks you may face.