Retiring into a crash: the risk you can't out-wait

Ask anyone who retired in 2008. The S&P 500 fell 38% that year — and for people who had just started living off their portfolios, the damage wasn't temporary.

Why early losses are different

Advisers call it sequence-of-returns risk. When you're still working, a crash is unpleasant but you buy the recovery on sale. When you're withdrawing, it reverses: every check you draw from a fallen portfolio sells more shares at the worst price. The market later recovers — your account, having sold off its shares cheap, doesn't fully come back. Same average returns, opposite outcomes, purely because of when the bad year landed.

You can't time it, but you can be indifferent to it

Nobody knows what the market does the year they retire. The alternative to predicting is to make part of your income immune: a pension annuity pays the same check whether the market is up 20% or down 30%. No sequence risk, because there's no sequence — just a contract.

The practical split

Guarantee the floor — the bills that arrive every month no matter what — with Social Security plus a pension annuity. Keep the growth money invested, where a crash is survivable because you're not forced to sell into it. That's how you retire into any market with the same monthly income.