Why your first five years of retirement matter most

While you're still working and saving, a down market is almost a gift. You keep buying at lower prices and recover on the way up. Once you retire and start withdrawing, that logic flips.

Same average return, very different outcomes

Two retirees can earn the exact same average return over 30 years and end up in completely different places: one comfortable, one out of money. The difference is the order the returns arrive in.

If a big loss lands in year two, you're selling investments while they're down to fund your income. Those shares are gone, so there are fewer left to rebound when the market recovers.

This is called sequence-of-returns risk

It's the single most underappreciated risk in retirement. It doesn't matter at 45 because you're not withdrawing. It matters enormously in the five years around your retirement date.

What actually helps

The fix isn't to guess the market. It's to make sure you never have to sell into a downturn to pay yourself. That usually means having guaranteed income covering your essentials, plus a protected bucket you can draw from when markets are down, so your long-term investments get left alone to recover.

That's the whole idea behind designing an income system before you retire, rather than hoping a pile of accounts works out.