Retirement planning is not just about how much you have saved. It is also about when you begin taking money out and what the market is doing when those withdrawals begin.

One risk many people do not hear about until they are close to retirement is called sequence of returns risk.

In simple terms, sequence of returns risk means the order of your investment returns matters once you begin using your savings for income. A market downturn early in retirement can be more damaging than the same downturn later because you may be withdrawing money while your portfolio is down.

At Client First Tax and Wealth Advisors, we believe retirement planning should make sense. That means helping you prepare for the "what ifs" before they become stressful decisions.

A Simple Example

Imagine two people retire with the same amount of money, take the same withdrawals, and earn the same average return over time.

The difference is timing.

One retiree has strong market returns early. The other retiree has poor market returns early. Even if their long-term average return is the same, the retiree who experiences losses early may have a harder time recovering because withdrawals are happening while the portfolio is down.

That can create a difficult cycle:

1. The market drops.

2. You still need income.

3. Investments may be sold at lower values.

4. Fewer dollars remain invested for the recovery.

This is why the first 5 to 10 years of retirement can be so important. Your portfolio is moving from "saving mode" to "income mode," and the timing of market returns can have a lasting impact.

Why This Matters

Most retirees are not trying to beat the market. They simply want to know whether their money can support the life they worked hard to build.

Sequence of returns risk matters because it can affect:

• How long your savings may last

• How much income you can safely withdraw

• Whether you need to adjust spending during market downturns

• Which accounts you use first for retirement income

• How taxes may affect your overall plan

You cannot control the market. But you can control how prepared your retirement income plan is.

4 Ways to Help Manage Sequence of Returns Risk

No plan can remove market risk completely, but the right strategy can help reduce the pressure to make rushed decisions during uncertain times.

1. Keep Some Money Available for Near-Term Needs

Having cash or more stable assets available may help you avoid selling long-term investments when the market is down. This money can be used for monthly income, taxes, emergencies, or planned expenses.

The goal is simple: give your investments time to recover.

2. Review Your Investment Mix Before Retirement

The portfolio that helped you grow your savings may not be the same portfolio you need for retirement income.

Before retiring, it is wise to review how much risk you are taking, how soon you will need income, and whether your investments still match your goals. Growth still matters in retirement, but balance becomes even more important.

3. Stay Flexible With Withdrawals

A good retirement income plan should leave room for adjustment. During a difficult market, small changes may help protect your long-term plan.

For example, you may delay a large purchase, use cash reserves first, or temporarily reduce withdrawals. These small decisions can make a meaningful difference when markets are under pressure.

4. Avoid Fear-Based Decisions

Market downturns are uncomfortable, especially when you are no longer receiving a paycheck. But reacting too quickly can create bigger problems.

Selling investments out of fear, changing strategies without a plan, or abandoning your retirement income approach during a downturn can turn short-term stress into long-term damage.

A clear plan can help you stay steady when the market feels uncertain.

A Helpful Way to Think About Retirement Income

One simple way to organize retirement income is to think in terms of time.

Money for now is for income, emergency needs, taxes, and short-term expenses.

Money for soon is for the next several years and may be invested with a focus on balance and stability.

Money for later is designed for future income, inflation protection, health care needs, legacy goals, or family support.

This approach can make retirement feel more organized. It helps separate the dollars you may need soon from the dollars that are meant to keep working for your future.

The Bottom Line

Sequence of returns risk is not about predicting the market. It is about preparing for the possibility that the market may not cooperate right when you retire.

A strong retirement plan should help answer three important questions:

1. Where will my income come from?

2. What happens if markets are down early in retirement?

3. How do my investments, taxes, and retirement goals work together?

At Client First Tax and Wealth Advisors, we help make financial planning make sense. Our team looks at the full picture so you can move into retirement with more clarity, coordination, and confidence.

Ready to See How Your Retirement Plan Holds Up?

Your retirement strategy should do more than pursue investment returns. It should help support your income needs through changing market conditions and give you confidence that the pieces of your financial life are working together.

If you are approaching retirement and wondering whether your income plan is prepared for market ups and downs, let's talk.

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Discover how a coordinated financial plan can help bring your financial picture into focus.

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This presentation is for informational and educational purposes only and should not be used to make investment decisions. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated, are not guaranteed. Client First Investment Management, LLC is a registered investment adviser with the SEC. Insurance products are offered through Client First Insurance Services, LLC. Client First Investment Management, LLC and Client First Insurance Services, LLC are affiliated through common ownership. Clients or prospective clients are under no obligation to use any of the affiliated businesses or services. Full disclaimers, disclosures, and terms of use can be found here: https://clientfirsttaxandwealth.com/disclosures