By Hans Goldstein, Founder, Retirement Literacy Foundation. He is also a licensed California insurance producer (#4273294). Education, not a product recommendation.Published · Methodology dated October 3, 2026
2022 was the first year since at least 1928 in which both the S&P 500 (minus 18.0%) and 10-year Treasuries (minus 17.8%) lost more than 10%. A $1,000,000 60/40 IRA fell to about $840,000, cutting a 75-year-old’s 2023 required distribution from $40,650 to $34,146.
The order of returns matters once you withdraw
While you are saving, a crash early and a boom late lands you in about the same place as the reverse. Once you start withdrawing, it does not. Money sold in a down year is gone; it cannot ride the recovery. Here is the same set of five annual returns, in opposite order, for two retirees who each start with $1,000,000 and withdraw $50,000 at the start of every year.
2008: the crash retirees could not afford
The S&P 500 lost 36.6% in 2008 on a total return basis (about minus 37% as commonly cited). From its October 2007 peak to its March 2009 low, the index fell about 57%. A retiree withdrawing through that stretch was selling shares near the bottom.
2022: when bonds fell with stocks
The usual cushion is bonds. In 2022 it failed: the S&P 500 lost 18.0%, 10-year Treasuries lost 17.8% and the broad investment-grade bond index lost 13.0%. Looking at stocks and 10-year Treasuries back to 1928, both fell in 1931, 1941, 1969, 2018 (Treasuries by just 0.02%) and 2022, and 2022 is the only year both lost double digits.
The RMD side effect
A required minimum distribution is the prior December 31 balance divided by a life-expectancy factor (Uniform Lifetime Table: 26.5 at 73, 25.5 at 74, 24.6 at 75). A down year shrinks the next year’s RMD, which sounds like relief, but any withdrawal taken in a drawdown still sells at low prices.
| $1,000,000 IRA, 60% stocks / 40% bonds | 12/31 balance | Age-75 RMD the next year |
|---|---|---|
| If 2022 had been flat | $1,000,000 | $40,650 |
| After 2022 (about minus 16%) | $840,000 | $34,146 |
Blend: 0.6 x minus 18.1% plus 0.4 x minus 13.0% = about minus 16.1%, annual rebalance, no fees. RMD = balance / 24.6.
What reduces sequence risk
- An income floor that pays essential bills regardless of markets: Social Security timing, a pension, or guaranteed income such as an immediate annuity or a ladder of fixed-rate contracts or Treasuries.
- A cash or short-term reserve of one to three years of spending, so you are not forced to sell after a crash.
- Flexible withdrawals that fall in bad years.
- Not assuming bonds always offset stocks. 2022 is the counterexample.
Each approach has costs: guaranteed income gives up liquidity and upside, cash earns less, and flexibility means spending less in bad years. The point is to decide before the bad year arrives.
Methodology (dated October 3, 2026)
Historical returns: S&P 500 and 10-year US Treasury calendar-year total returns from the NYU Stern (Damodaran) historical returns dataset (updated January 2026); the 2007 to 2009 peak-to-trough figure is computed from closing prices of 1,565.15 (October 9, 2007) and 676.53 (March 9, 2009); the Bloomberg US Aggregate Bond Index 2022 return from the benchmark column published for the iShares Core US Aggregate Bond ETF; the municipal index return as reported in a mutual fund annual report filed with the SEC. RMD factors from the IRS Uniform Lifetime Table (Treas. Reg. 1.401(a)(9)-9). The five-year sequence chart is hypothetical arithmetic: withdrawals of $50,000 at the start of each year, then that year’s return. Past performance does not predict future results. Checked October 3, 2026.
Sources
- NYU Stern, Damodaran: historical returns on stocks, bonds and bills (1928 to present)
- iShares Core US Aggregate Bond ETF: benchmark (Bloomberg US Aggregate) returns
- Closing milestones of the S&P 500 (October 2007 peak, March 2009 low)
- SEC EDGAR: WesMark Funds N-CSR for 2022 (municipal index return)
- Treas. Reg. 1.401(a)(9)-9 (Uniform Lifetime Table), eCFR
- IRS Publication 590-B (required minimum distributions)
- 26 U.S.C. 401(a)(9) as amended by SECURE 2.0 (RMD age 73, 75 from 2033), Cornell LII
Goldstein, H. (2026, October 3). Sequence-of-Returns Risk: What 2008 and 2022 Teach Retirees. Retirement Literacy Foundation. https://retirementliteracyfoundation.org/research/sequence-of-returns-risk-2008-2022/
Journalists and educators may quote and chart these findings with a link to this page. Data: download the CSV.
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