Sequence of Returns Risk Explained | Why Retirement Timing Matters

You can choose when to retire. You can't choose the market conditions you retire into. Two investors retire at age 65 with identical $500,000 portfolios. Both experience the same annual investment returns, producing the same arithmetic average annual return of approximately 5.4%. Yet by age 83, one portfolio has approximately $20,000 remaining, while the other has approximately $477,000. What explains the difference? The order in which investment returns occur. In this video, Andrew Rodych, Portfolio Manager and Partner with Q Wealth Partners, explains sequence-of-returns risk and why market performance early in retirement can significantly affect how long retirement savings last. When investors begin withdrawing money from their portfolios, negative investment returns early in retirement can have a lasting impact, even when markets subsequently recover. For Saskatchewan farm families, business owners and individuals approaching retirement, this raises important financial planning considerations. The timing of retirement, the diversification of assets available to fund withdrawals and the market environment at the beginning of retirement can all influence long-term financial outcomes. Understanding sequence-of-returns risk is an important part of developing a retirement income strategy. In this video, you'll learn: What sequence-of-returns risk means Why identical average returns can produce different retirement outcomes How investment withdrawals interact with market volatility Why diversification and retirement income planning matter What farm families and business owners should consider when transitioning into retirement About Andrew Rodych Andrew Rodych, MPP, CIM®, CIWM, FCSI®, is a Portfolio Manager and Partner with Q Wealth Partners. Learn more about PWM Private Wealth Counsel: https://www.pwmprivate.com/ Learn more about Q Wealth Partners: https://www.qwealth.com/ #RetirementPlanning #SequenceOfReturnsRisk #RetirementIncome #FinancialPlanning #FarmSuccession #WealthManagement Important Information Quintessence Wealth (Q Wealth) is a partnership that is registered as a portfolio manager, exempt market dealer and investment fund manager. The portfolio manager registration allows Q Wealth to provide investment advice to its clients. The exempt market dealer registration allows Q Wealth to engage in trading activity. These services are provided by Q Wealth through registered advising representatives and dealing representatives, respectively. Q Wealth is a partnership that is owned by its partners, including PWM Private Wealth Counsel. As a client of Q Wealth, you may receive services from both Q Wealth and PWM Private Wealth Counsel. Note that individuals from PWM Private Wealth Counsel will only provide investment advice and trading advice if they are registered as advising representatives and dealing representatives of Q Wealth, and in providing such services, they will be doing so on behalf of Q Wealth only. PWM Private Wealth Counsel may however provide wealth management services such as financial planning, estate and retirement planning, insurance, group benefits and others. Q Wealth Partners is a registered trade name of Quintessence Wealth, a registered as a Portfolio Manager in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, Saskatchewan and Yukon, an Investment Fund Manager in Newfoundland and Labrador, Ontario, and Quebec, an Exempt Market Dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan, and a Commodity Trading Manager in Ontario. The Ontario Securities Commission (OSC) is the principal regulator for Quintessence Wealth. Please visit www.qwealth.com for more information. Investment Illustration Disclosure The investment scenarios presented by Andrew Rodych are provided for illustrative and educational purposes only and are intended to demonstrate sequence-of-returns risk during retirement. The comparison uses two hypothetical portfolios, each beginning with $500,000 at age 65, and applies the same historical annual investment returns from 2000 to 2017 in opposite sequences, together with retirement withdrawals. Both scenarios have the same arithmetic average annual return of approximately 5.4%; this should not be interpreted as a compound annualized rate of return. The resulting portfolio values at age 83 differ significantly because of the order in which investment returns occur and their interaction with withdrawals. These scenarios do not represent actual client investment results or predict future performance. Historical returns are not indicative of future results. Actual investment outcomes will vary depending on market conditions, withdrawal amounts and timing, asset allocation, investment fees, taxes and individual circumstances.