Income HorizonRetirement income planner Check my plan

Walkthrough

What if the market crashes in my first year of retirement?

A crash right after you retire is the scenario retirees worry about most. Here’s what a 10% to 40% first-year drop did to every historical retirement, and what helped.

Updated · U.S. market history 1928–2025 · How we test

Your numbers

$
$
Before taxes, in today’s dollars
years
%
The rest is 10-year Treasuries

Results update as you type. Amounts are in today’s dollars.

If stocks fall 30% in your first year70%

With fixed spending, 48 of 69 historical 30-year retirements still lasted after a 30% first-year drop, compared with 94% with history as it happened. Guardrail buckets lasted in 93%.

  • Fixed spending
  • Guardrails
  • Guardrail buckets
0%50%100%Fixed (4% rule style), history as it was: 94%Guardrails, history as it was: 100%Guardrail buckets, history as it was: 100%Fixed (4% rule style), stocks -10% in year one: 87%Guardrails, stocks -10% in year one: 100%Guardrail buckets, stocks -10% in year one: 100%Fixed (4% rule style), stocks -20% in year one: 80%Guardrails, stocks -20% in year one: 97%Guardrail buckets, stocks -20% in year one: 96%Fixed (4% rule style), stocks -30% in year one: 70%Guardrails, stocks -30% in year one: 94%Guardrail buckets, stocks -30% in year one: 93%Fixed (4% rule style), stocks -40% in year one: 65%Guardrails, stocks -40% in year one: 87%Guardrail buckets, stocks -40% in year one: 86%As it was-10%-20%-30%-40%
How often 30-year retirements lasted when the first year’s stock return is replaced by each drop. Grouped by drop size.
First-year stocksFixed spending lastedGuardrails lastedGuardrail buckets lastedGuardrails’ lowest spending*
As history happened94%100%100%$32,000
-10%87%100%100%$32,000
-20%80%97%96%$32,000
-30%70%94%93%$32,000
-40%65%87%86%$32,000

*Lowest yearly spending with guardrails among the starts that lasted.

What this means

A bad first year hurts more than a bad year later, because withdrawals lock in the loss before a recovery can help. With fixed spending of $40,000 from $1,000,000, a 30% first-year drop lowers historical success from 94% to 70%.

Flexibility softens the blow. After the same drop, guardrails lasted in 94% of starts and guardrail buckets in 93%, because spending eases temporarily and cash covers withdrawals while stocks recover.

Real first-year drops of 10% or more among start years with 30 full years of data, at your spending: 1930 (-25%): lasted, ended with $831k; 1931 (-44%): lasted, ended with $1.37M; 1937 (-35%): lasted, ended with $323k; 1940 (-11%): lasted, ended with $871k; 1941 (-13%): lasted, ended with $1.23M; 1957 (-10%): lasted, ended with $646k; 1973 (-14%): lasted, ended with $232k; 1974 (-26%): lasted, ended with $1.25M. More recent drops, like 2008, are covered in our year-by-year walkthroughs.

Why year one matters most

A 30% drop in year 20 of retirement does far less damage than the same drop in year one. Early in retirement your savings are at their largest and every withdrawal during a downturn sells shares at low prices. Those shares miss the recovery.

This is sequence-of-returns risk in its sharpest form. The results above take every historical retirement and replace its first-year stock return with a crash, keeping everything after it the same.

What to do if it happens

  • Spend from cash, not stocks. A bucket of a few years of withdrawals lets stocks recover untouched.
  • Trim a little, temporarily. A 10% cut for a year or two has an outsized effect after an early crash.
  • Don’t abandon the plan. In history, the worst outcomes came from selling stocks after the crash and missing the recovery.

Assumptions

  • The first year’s stock return is replaced by the drop shown; every later year follows actual history.
  • Fixed and guardrail plans hold 60% stocks; guardrail buckets keep 4 years of withdrawals in Treasuries with the rest 80% stocks.
  • Each 30-year stretch since 1928 is tested. No taxes or fees.

New to a term? See the retirement income glossary.

Common questions

What happens if the market crashes right after I retire?

With fixed spending, historical success falls noticeably after a large first-year drop. Guardrails and cash buckets recovered much of that, because spending eases and stocks aren’t sold at the bottom.

Should I delay retirement after a market crash?

Not necessarily. If you have a cash bucket and can trim spending modestly, history suggests most plans recover. Working an extra year also helps by delaying withdrawals.

Related tools

ComparisonSequence-of-Returns RiskWhy the order of returns matters, shown with real history.WalkthroughRetired in 2008A 37% drop in year one: how three plans came through.WalkthroughRetired in 1929The Great Depression, and why it wasn’t the worst start.CalculatorRetirement Bucket CalculatorSize your cash bucket and see how sizes compared historically.

How we calculate this

For every historical start year we replace the first year’s S&P 500 return with a fixed drop (−10% to −40%), keep that year’s bond and inflation figures, and replay the rest of history as it happened.

Data: S&P 500 total returns, 10-year Treasury and 3-month Treasury bill returns as compiled by Aswath Damodaran (NYU Stern), and CPI-U inflation from the U.S. Bureau of Labor Statistics, 1928–2025 (2025 preliminary). Read the full methodology and limitations.