One of the elements that greatly magnifies the withdrawal risk is the Order of Returns Principle. When your portfolio has losing years it can affect its ability to last through life expectancy more than anything else. The graphs below illustrate this.
What’s interesting to note about this graph is that both portfolios earned 8.03% and both Ron and Barb withdrew the same percentage for income on an annual basis. Notice that Ron’s portfolio lasted only 15 years while Barb’s lasted a lifetime . What caused this was not that loses did occur, but when they occurred. For Ron, the declines that occurred early in his retirement had a greater negative impact on his retirement savings than did the declines experienced by Barb that occurred later in her retirement years.