3618. What is sequence of return risk? How can sequence of return risk impact a taxpayer’s retirement income strategy?Alexis LongCaroline McKay5242015-07-28T20:33:00Z2016-06-30T18:04:00Z2016-07-09T19:48:00Z11871067Summit Business Media821252143618. What is sequence of return risk? How can sequence of return risk impact a taxpayer’s retirement income strategy?Sequence of return risk is a market volatility issue surrounding the order in which returns on a taxpayer’s investments occur.. Essentially, if a greater proportion of low or negative returns occur during the early years of retirement, when taxpayer is taking withdrawals, the taxpayer’s overall returns are going to be lower than if those negative or low returns occurred at a later point in the taxpayer’s (and the investment’s) lifetime. Logically, this is because the investment has had less time to grow during the early years of retirementof ownership, so there is a danger that negative returns could even cause a portion of the principal investment to be lost. Even if the return is simply lower than average in the early years, the investment will generate an overall lower return because the investment will gain less value early on, meaning there will be a lower account value to generate growth even in later, higher return periods.When the taxpayer is making withdrawals from his or her investment accounts, this the risk of outliving the retirement assets is magnified when negative returns occur in early years.