The one thing most retirement plans get wrong

Most retirement plans focus on average return. Here's why that can be dangerously misleading.

The problem with averages

If your portfolio averages 7% over 30 years, you're fine — right? Maybe. But "average" hides something important: the order in which those returns arrive.

This is called sequence of returns risk, and it's the single biggest threat to a retirement plan that most people never hear about.

Why the order matters

Imagine two retirees with identical portfolios and identical average returns over 20 years. The only difference: one experiences poor returns in the first few years of retirement, and the other experiences them near the end.

The retiree who hits bad returns early — while simultaneously withdrawing income — can run out of money decades sooner than the one who got lucky with timing. Same average return. Dramatically different outcome.

What this means for your plan

A good retirement plan doesn't just project an average growth rate and call it done. It stress-tests your portfolio against unfavorable sequences — what happens if the first three years of your retirement look like 2008? What if they look like 2022?

These aren't scare tactics. They're the scenarios that separate a resilient plan from a fragile one.

How we handle it

We build income strategies that account for sequence risk from the start. That means maintaining enough in stable, accessible assets to cover several years of spending — so you're never forced to sell investments at a loss during a downturn.

It's less exciting than chasing returns. It's also what actually works.

If your retirement plan hasn't been stress-tested against bad early returns, that's a conversation worth having.