When planning for retirement, many people focus on how much they’ve saved or what their investment returns might look like over time. But there’s a lesser-known risk that can significantly impact your retirement income: Sequence of Returns risk. At Evergreen Wealth Advisors, we help our clients understand and prepare for this risk through a proven, holistic approach called The Bucket Plan®.
What is Sequence of Returns Risk?
Sequence of Returns risk refers to the danger of experiencing poor market returns in the early years of retirement, right when you’re beginning to withdraw from your savings.
Imagine two retirees with the same average annual return over 20 years. If one experiences several negative years at the very start, while the other faces those down years later, their outcomes will be dramatically different. The retiree hit with losses early on could run out of money years sooner—even though their “average return” is identical.
This risk is especially critical for people who are:
- Approaching retirement (within 5 years of retiring).
- New retirees who are beginning to draw regular income from their portfolios.
- Anyone relying heavily on investments for income rather than pensions or guaranteed sources.
Why? Because withdrawing funds during market downturns locks in those losses and leaves less money to recover when the markets rebound.
How The Bucket Plan Mitigates Sequence of Returns Risk
The Bucket Plan is a time-segmented strategy that helps organize your money into three “buckets”:
- Now Bucket – Safe, liquid cash set aside for everyday expenses and emergencies. This protects you from needing to sell investments at the wrong time.
- Soon Bucket – Conservative investments designed to provide reliable income for the next 5–10 years. Because this money isn’t tied to the stock market’s daily swings, you don’t have to worry about market downturns derailing your lifestyle.
- Later Bucket – Growth-focused investments designed for long-term needs and legacy goals. This money has time to ride out market volatility and grow for the future.
By separating assets this way, you protect near-term income needs while giving your long-term investments time to recover from market downturns. In other words, The Bucket Plan creates a buffer that directly addresses Sequence of Returns risk—so your retirement isn’t at the mercy of bad timing.
Why Evergreen Wealth Advisors Uses The Bucket Plan
At Evergreen Wealth Advisors, our mission is to deliver holistic wealth management that covers all five pillars: Retirement Income Planning, Investment Planning, Tax Planning, Health Care Planning, and Legacy Planning. The Bucket Plan fits seamlessly into this framework by ensuring your income strategy is resilient, tax-efficient, and aligned with both your short-term and long-term goals.
For many of our clients, the peace of mind that comes from knowing they won’t be forced to sell during a market downturn is priceless. Instead of worrying about “what the market did today,” they can focus on living the retirement they’ve dreamed about.
Ready to Protect Your Retirement from Sequence of Returns Risk?
Don’t let bad timing jeopardize decades of savings. At Evergreen Wealth Advisors, we can help you design a customized Bucket Plan that shields your retirement income from market volatility and gives you confidence no matter what the markets bring.
Schedule your no-obligation consultation here with one of our advisors, and let’s make sure your retirement is built to last.