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Ep 34 - Sequence Of Return Risk
In this episode, we tackle two of the most important retirement planning concepts: the Rule of 4% and the sequence of returns risk. We break down what the traditional 4% withdrawal rule means, why it’s outdated in today’s markets, and how following it blindly could actually hurt our retirement security.
We explore how the order of market gains and losses can dramatically impact our savings once we begin withdrawing money, even if long-term averages look solid. Using examples from the S&P 500, we show how early negative years can devastate retirement portfolios, while exploring alternatives like index annuities to help reduce risk.
Then we shift into a listener question about Roth 457 (deferred comp) plans: Can we withdraw funds early without penalties? We walk through the rules around contributions, growth, the five-year requirement, and how withdrawals are sequenced so we can make informed decisions.
If we’ve ever wondered whether the Rule of 4% still works, how to protect our retirement from bad timing, or how Roth 457 withdrawals really function, this episode will give us clarity and confidence.
00:00 – Intro
01:00 – Why timing of returns matters in retirement
02:39 – Example: S&P 500 returns 2000-2018
03:37 – Impact of order of returns (no withdrawals)
04:50 – The 4% Rule explained & its origins
05:31 – Why the 4% Rule no longer works reliably
06:42 – Withdrawals + negative years = compounded losses
07:56 – Using index annuities to reduce market risk
09:49 – Pros & cons of protected strategies
11:20 – TAP annuity: unique Washington benefit
12:29 – Comparing TAP annuity vs portfolio withdrawals
13:56 – Managing withdrawals: why strategy matters
15:07 – Listener Q&A: Roth 457 withdrawal rules
15:43 – Contributions vs growth: what we can withdraw
16:32 – The 5-year and age 59½ rules explained
17:15 – Withdrawal sequencing: contributions → conversions → growth
Links:
Free Washington Retirement Planning Community
Plan 3 Investment Advice
Schedule Meeting
More free resources at WATRSPERS.com
View all episodes
By Ethan Meikle
5
66 ratings
In this episode, we tackle two of the most important retirement planning concepts: the Rule of 4% and the sequence of returns risk. We break down what the traditional 4% withdrawal rule means, why it’s outdated in today’s markets, and how following it blindly could actually hurt our retirement security.
We explore how the order of market gains and losses can dramatically impact our savings once we begin withdrawing money, even if long-term averages look solid. Using examples from the S&P 500, we show how early negative years can devastate retirement portfolios, while exploring alternatives like index annuities to help reduce risk.
Then we shift into a listener question about Roth 457 (deferred comp) plans: Can we withdraw funds early without penalties? We walk through the rules around contributions, growth, the five-year requirement, and how withdrawals are sequenced so we can make informed decisions.
If we’ve ever wondered whether the Rule of 4% still works, how to protect our retirement from bad timing, or how Roth 457 withdrawals really function, this episode will give us clarity and confidence.
00:00 – Intro
01:00 – Why timing of returns matters in retirement
02:39 – Example: S&P 500 returns 2000-2018
03:37 – Impact of order of returns (no withdrawals)
04:50 – The 4% Rule explained & its origins
05:31 – Why the 4% Rule no longer works reliably
06:42 – Withdrawals + negative years = compounded losses
07:56 – Using index annuities to reduce market risk
09:49 – Pros & cons of protected strategies
11:20 – TAP annuity: unique Washington benefit
12:29 – Comparing TAP annuity vs portfolio withdrawals
13:56 – Managing withdrawals: why strategy matters
15:07 – Listener Q&A: Roth 457 withdrawal rules
15:43 – Contributions vs growth: what we can withdraw
16:32 – The 5-year and age 59½ rules explained
17:15 – Withdrawal sequencing: contributions → conversions → growth
Links:
Free Washington Retirement Planning Community
Plan 3 Investment Advice
Schedule Meeting
More free resources at WATRSPERS.com
More shows like Washington State Retirement Planning
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