Sequence of returns risk is the danger that the timing of investment losses, especially early in retirement, can permanently damage your portfolio even if long-term average returns look fine on paper. If you experience significant losses in the first few years of drawing down your savings, you're selling more shares at lower prices to cover expenses, leaving fewer shares to benefit from any eventual recovery. This is different from the risk of bad returns overall; it's specifically about the order in which those returns occur. A retiree who experiences a market crash in year one of retirement faces a very different outcome than one who experiences the same crash in year fifteen. Managing this risk often involves keeping a cash reserve, adjusting withdrawal rates, or using guaranteed income sources to avoid selling investments during downturns.