Chapter 11: Glide paths and life changes
Schwab's published sequence-of-returns example follows two retirees who look identical on paper. Each starts retirement with $1,000,000, each withdraws $50,000 a year, and each earns the same average return over the whole stretch. The only difference is the order the returns arrive in, and the retiree whose −15% years come first runs short of money years earlier. Same average, same spending, different sequence, different life. Sequence risk is the name for that gap: once withdrawals begin, the order of returns matters about as much as the returns themselves.
The mechanics are blunt. While you are saving, an early crash is a discount; your contributions buy more shares, and the average works itself out. While you are spending, every withdrawal taken in a down year converts a temporary loss into a permanent one, because the shares you sold cheap never get to recover. You spent them. The danger therefore concentrates in a window: roughly the last ten years before the retirement date and the first ten after, when the balance is at its largest and the selling has begun. This chapter is about shaping the portfolio around that window, and about what the withdrawal research says you can actually spend once you are inside it.
What a glide path is
A glide path is a pre-written schedule that shifts your mix as a date approaches, taking risk when your life can absorb it and shedding risk as the window opens. Chapter 7's target-date funds are glide paths mass-produced; this chapter is about owning the decision yourself, because the date and the slope deserve to be choices rather than defaults.
The calculator opens 30 years from the date, where the Middle style holds 90% stocks and 10% bonds, and the worst-year readout at that mix prints −39.0% (1926–2024). Thirty years out, that number is survivable in exactly the Chapter 9 sense: time, contributions, and no need to sell. The shaded band marks the sequence-risk years, the last ten before the date and the first ten after. Slide yourself toward the band and watch the styles converge on the same instinct: the closer the window, the smaller the worst year you can afford to host.
The bond tent
The standard glide descends and stays down. Research suggests a better landing. Pfau and Kitces (Journal of Financial Planning, January 2014) tested glide paths that start retirement bond-heavy and then let the equity share drift back upward through retirement, and found the rising path reduced failure rates compared with static or declining ones. Kitces draws it as a bond tent: the bond share climbs through the final working years, peaks at the retirement date, and slopes back down afterward as equities rebuild. The logic sits right on top of the shaded band. Maximum safety lands exactly where sequence risk is largest, and the portfolio re-accepts equity risk later, once the dangerous first decade has passed and the remaining money still has a long horizon. Hugo, 52 and eight years from slowing down, starts raising his tent in the next chapter rather than waiting for a birthday to do it for him.
How much can you safely take out each year?
The research gives a range, and the range has a story. Bengen's original 4% rule (1994) asked what first-year withdrawal, raised for inflation each year afterward, survived every 30-year stretch in his historical data; the worst-case answer was 4%. His 2025 book revisits the question with a more diversified portfolio and raises the cautious starting point to 4.7%. Morningstar's State of Retirement Income (December 2025 edition) lands lower: a base-case safe starting rate of 3.9%, defined as 30 years with a 90% success rate in forward-looking simulations. The numbers differ because the questions differ. Bengen asks what survived history; Morningstar asks what survives simulations built on today's market assumptions, which is a stricter examiner when expected returns sit below the historical average. They agree on the part that matters most: flexibility raises the number. A retiree willing to skip an inflation raise or trim spending after a bad year can sustainably start higher than one who needs a fixed check regardless of weather. And both traditions point at the same villain when plans fail, which is a bad first decade. Sequence risk again, wearing a different hat.
Elaine's arithmetic
Elaine needs $5,000 a month, which is $60,000 a year, from a $700,000 portfolio. Run the research range against it: 3.9% to 4.7% of $700,000 is $27,300 to $32,900 a year. Drawing the full $60,000 from the portfolio would be an 8.6% rate, nearly double the most generous number in the research, so the portfolio is not the whole plan and was never going to be. The plan is a stack. The portfolio sustainably supplies $27,300–32,900. Social Security carries the remaining $27,100–32,700, and the claiming-age decision that sizes her check belongs to the Finvest Personal Finance Guide. And her ladder from the Finvest Cash & Bonds Guide, the twelve rungs that land $5,000 on a printed morning each month, is the sequence-risk armor: the next years of spending arrive on schedule whether or not the market cooperates, so a bad first decade never forces her to sell cheap shares to buy groceries.
Elaine wrote two numbers on an index card, $27,300 on one side and $32,900 on the other, the 3.9% and 4.7% of her $700,000. Neither one is $60,000, and for an evening that felt like a verdict. Then she set the card next to the kitchen calendar with its twelve maturity dates and finished the arithmetic: the card plus Social Security covers the year, and the ladder means the next thirty-six months of spending never care what the market did this week. The card lives in her plan folder now, guardrails on a road she can finally see.
Life changes that redraw the path
Retirement is the famous glide, not the only one. A house purchase, a career break, an inheritance, a new child: each one re-runs Chapter 1, never the whole guide. List the goals again, attach the new dates, and route any dollar with a date inside about five years out of the mix and onto the safe shelf, into bills or a ladder per the Cash & Bonds Guide. A career break cuts your risk capacity, so Chapter 9's three questions get re-asked with the smaller paycheck in mind. An inheritance is the sneaky one, because it arrives mid-plan with feelings attached and a strong urge to treat it as special money. The discipline is one sentence: the plan absorbs the money; the money does not rewrite the plan. New dollars land in the same buckets, against the same dates, at the same target mix, and anything that genuinely changes the goals gets written as a new plan line during the annual review rather than decided in the week the check clears.
Where glide paths go wrong
The classic error is derisking all at once on retirement eve, after gliding nowhere for thirty years. A 90/10 mix has printed a −39.0% worst year (1926–2024), and one of those landing in the final approach does damage no later glide can repair; the descent has to start while the runway is still distant. The opposite error is gliding to zero, parking a 30-year retirement entirely in bonds and cash, which swaps a market risk for an inflation certainty; the tent's far side exists because remaining money still has decades of groceries to fund. The third error is reading 4% (or 3.9%, or 4.7%) as a guarantee rather than a starting point with guardrails. And the quietest error is gliding by age alone while the actual dates move, as if the plan were about birthdays instead of withdrawals.
Safety peaks at the date. Glide down through the last decade before retirement, hold the floor through the first dangerous years, then let stocks drift back up. Start withdrawals inside the research range of 3.9–4.7% and write the bad-year rule before the bad year.
Line eleven: "My glide: __/__ today, reaching __/__ at retirement, with safety peaking at the date; withdrawals start inside 3.9–4.7% with a written bad-year rule." Eleven lines down. The next chapter watches five people fill in every blank, and the chapter after that hands you the page.
Key takeaways
- Sequence risk is real and concentrated: in Schwab's published example, two retirees with the same $1,000,000, the same $50,000 withdrawals, and the same average return end differently because the one whose −15% years arrive first runs short years earlier.
- The risky window is roughly the last ten years before retirement and the first ten after, which is exactly where the calculator shades the band.
- The bond tent (Pfau-Kitces, January 2014) puts peak safety at the retirement date and lets equities drift back up afterward; rising glides reduced failure rates versus static or declining ones.
- The withdrawal research brackets a starting range: Bengen's worst-case-history 4%, raised to 4.7% in his 2025 book, against Morningstar's forward-looking 3.9% (December 2025). They differ on method and agree that flexibility raises the number.
- Elaine's stack shows the working shape: $27,300–32,900 a year from $700,000, Social Security for the rest of her $60,000, and a ladder so the early years never sell into a storm.
Sources: Schwab on sequence-of-returns risk · Pfau & Kitces, rising equity glide paths · Kitces on the bond tent · Morningstar State of Retirement Income · Vanguard model-allocation data · Finvest Cash & Bonds Guide · Finvest Personal Finance Guide · Bengen's A Richer Retirement (2025)