Sequence Risk Calculator

What is the Sequence Risk Calculator?

Sequence of returns risk is the danger that poor market returns arrive early in retirement, just as you start withdrawing. Losses in the first few years shrink the corpus while withdrawals continue, so there is less money left to benefit from the later recovery.

Enter your corpus, yearly withdrawal, number of years, average return and a bad-year return. The calculator compares two retirements with the same returns in a different order — three bad years at the start versus three bad years at the end — and shows the difference in ending wealth.

How to use the Sequence Risk Calculator

1. Initial Corpus (INR) (sample: 2,00,00,000)
2. Annual Withdrawal (INR) (sample: 9,00,000)
3. Years (sample: 20)
4. Average Return (%) (sample: 10)
5. Shock Year Return (%) (sample: -15)
6. Press Measure Sequence Risk (results also refresh as you type). The result card shows the Sequence Risk Gap, along with Early-Bad Ending Balance, Late-Bad Ending Balance and Annual Withdrawal.

Formula used

Balanceₜ = (Balanceₜ₋₁ − Withdrawal) × (1 + Rₜ)

• Early-bad sequence = first 3 years at the shock return, last 3 at average + 4%, the rest at average
• Late-bad sequence = the same returns in reverse order

Both sequences contain exactly the same yearly returns; only their order differs.

Worked example

These are the sample values already filled in the calculator above, and the result it returns for them:

Tips for using the Sequence Risk Calculator

• Keep 2–3 years of withdrawals in debt or cash so you never sell equity in a crash.
• A lower initial withdrawal rate or flexible spending reduces sequence risk.
• Sequence risk matters most in the five years before and after retirement.