The retirement risk zone refers to the 5–10 years before and after retirement, when market volatility can dramatically affect your super.
Sequencing Risk Explained
If you retire during a market downturn, negative returns in the early years—combined with your required drawdowns—can permanently reduce your super’s longevity.
📌 Example Scenario:
Starting balance: $1,000,000
Annual withdrawal: $40,000
Year 1: –15% return
Year 2: +5%
Year 3: +10%
Year 4: +20%
Even with three positive years, the early loss forces you to sell more units early, reducing compounding and accelerating depletion.
Strategies to Manage Sequencing Risk
Diversify Investments: Include property or fixed income assets.
Trim Spending: Reduce withdrawals if above the minimum.
Delay Retirement: More time to recover and increase super via employer contributions.
Work Part-time: Smooth out income and maintain social engagement.
While you can’t control the market, you can plan for its risks. Speak to SWU Group financial adviser to assess what works best for you: financialsuccess@simonwu.com.au