What is sequence of returns risk in drawdown?
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In short: Poor investment returns early in retirement combined with withdrawals can permanently deplete a drawdown pot — even if average returns recover later. A cash buffer reduces the risk of selling equities in downturns.
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Reviewed by Kaiser Khan
Two retirees with the same average return can have very different outcomes depending on when losses occur.
Keeping one to three years of withdrawals in cash inside drawdown is a common mitigation.
See drawdown income guide.
Primary source: moneyhelper.org.uk/en/savings/investing
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