Part 4/8:
The impact of the sequence of returns can be illustrated through a hypothetical situation involving a major market boom followed by a downturn. If two retirees, Jack and Jill, entered retirement at a market peak and faced subsequent down years, their experiences could differ drastically based on the timing of market gains and losses. For example, if Jill tapped into her savings after experiencing positive returns, she could benefit from compound growth. Conversely, Jack, who might withdraw funds during a market slump, could find his financial stability severely compromised.