Two retirees can earn the same average return over 20 years and still end up in very different places, because the order those returns arrive in, not just the average, shapes how long a retirement account lasts. Financial planners call this sequence-of-returns risk: a market decline that hits early in retirement, while withdrawals are already being taken, can do far more damage to a plan than the same decline arriving ten years later, after the account has had time to grow.

What do past bear markets show about this risk?

The 1973-74 bear market is a clear example. The S&P 500 fell 48.2% from its January 1973 peak to its October 1974 low, a decline that took about 21 months to bottom out and roughly 7.5 years before the index closed above its old high again.

A newer example came in 2022, when stocks and bonds lost money at the same time, a combination that is supposed to be rare. Vanguard's own shareholder report for its Balanced Index Fund (60% stocks, 40% bonds) showed a return of -16.97% for the year; the fund's bond benchmark alone fell 13.07%, which Vanguard called the worst year on record for that index. For a retiree taking withdrawals from a balanced account in a year like that, selling at a loss to cover income needs leaves fewer shares in place to benefit when the market eventually turns.

How much does the starting withdrawal rate matter?

A 1994 study by financial planner William Bengen tested decades of market history and found that a first-year withdrawal of 4% of the portfolio, adjusted upward each later year for inflation, lasted at least 33 years without running out of money in any period he tested, generally supporting 30 or more years of income for a 50/50 stock-bond mix. A starting rate only slightly higher, 4.25%, could have exhausted a portfolio in as little as 28 years under past market conditions, which is part of why the first-year rate gets so much attention.

Can adjusting withdrawals after a downturn help?

A 2006 follow-up study by Jonathan Guyton and William Klinger built on that research with rules for changing withdrawals as conditions change, rather than fixing the dollar amount for good at the start. Under their approach, a 10% cut applies in any year the withdrawal rate has climbed more than 20% above the original rate (that cut stops applying once 15 or fewer years remain in the plan), and a 10% increase applies when the rate has fallen more than 20% below it. The idea is to take a bit less while a portfolio recovers from an early decline, instead of withdrawing the same inflation-adjusted amount no matter what the market just did.

Does the stock-bond mix need to shift over time?

One line of research looks at starting retirement with a lower stock allocation and raising it over the years that follow, the opposite of the usual advice to grow more conservative with age. A 2014 study by Wade Pfau and Michael Kitces found that glide paths starting around 20% to 40% in stocks and rising to roughly 60% to 80% held up better in scenarios with poor early returns than a flat allocation, because less of the portfolio is at risk during the years a downturn would hurt the most, and more is invested by the time a later recovery arrives.

Does rebalancing during a downturn make a difference?

Rebalancing, selling some of what has done well to buy more of what has fallen, works the same way in retirement as it does while saving: it resets the portfolio back toward its target mix instead of letting whichever asset did better quietly take over. Doing this on a schedule, rather than reacting to headlines, is one of the more mechanical ways to manage how a downturn affects the overall allocation.

Where does Social Security timing fit in?

Delaying Social Security is one lever that does not depend on market performance at all. For anyone born in 1943 or later, each year of delay past full retirement age, up to age 70, adds 8% to the eventual monthly benefit. Drawing a little less from savings early on while that benefit grows in the background can reduce how much sequence risk matters, since less of the income need rides on the account's starting trajectory.

A reasonable starting withdrawal rate, a plan for adjusting it if markets drop early, an allocation that fits the time horizon, and a decision about when to start Social Security each support the others instead of standing alone. Former Magellan Midstream employees weighing a retirement date have one more piece worth reviewing alongside all of this: how Magellan Midstream's own retirement benefits are structured, and what that means for building a withdrawal plan around them.

Do Magellan's pensions offer an income floor against sequence risk?

Sequence risk mostly threatens money sold at a loss to cover spending, which puts Magellan's two ONEOK pensions in a different category. The non-union Magellan Pension Plan lets a participant take a single-life annuity, a joint-and-survivor annuity, a lump sum, or a combination of annuity and lump sum, and ONEOK contributed $17 million to that plan in 2025 alone, consistent with an ongoing, funded plan still receiving contributions. The Magellan Pension Plan for USW Employees offers the same single-life or joint-and-survivor annuity choice, plus a lump sum, though its plan document does not include that same combination option. An annuity payment from either plan arrives on the same schedule whether the market is up or down that year, so pairing it with savings held for growth is one way to lower how much a retirement income plan depends on the market's order of returns.