Two portfolios earning the same average return over twenty years can produce very different outcomes for their owners. The difference is the order in which those returns arrived.
Order is irrelevant while saving
For an investor making no withdrawals, the final balance depends on the compounded product of annual returns, and multiplication does not care about sequence.
A decade of poor results followed by a decade of strong ones ends in exactly the same place as the reverse, provided nothing was added or removed along the way.
This is why accumulation is comparatively forgiving, and why long horizons let a saver treat volatility as noise rather than as a threat to the plan.
Withdrawals break the symmetry
Once money is being taken out, each withdrawal removes units permanently, and units sold during a downturn are sold at depressed prices.
Selling more units to fund the same income leaves fewer behind to participate in any recovery, so a subsequent rebound applies to a smaller base and cannot fully repair the damage.
A poor first few years of retirement therefore does lasting harm that identical poor years late in retirement would not, even though the average return is unchanged.
The vulnerable window is narrow
Exposure concentrates around the transition into retirement, when the portfolio is at its largest and the withdrawal period is at its longest.
A decline of a given size does the most damage at that point, because it reduces the largest balance the retiree will ever hold and does so before any income has been drawn from it.
The same decline occurring well into retirement affects a smaller balance over a shorter remaining period, which is why the risk is usually described as front-loaded.
Flexibility is the main defence
Reducing withdrawals during weak years preserves units, and even modest temporary reductions substantially change how long a portfolio lasts under poor early conditions.
Holding a portion in stable assets allows income to be drawn from something that has not fallen, giving volatile holdings time to recover rather than forcing sales into weakness.
Guaranteed income sources cover part of the requirement regardless of market conditions, which reduces how much has to be withdrawn from the portfolio in the worst years.
Why average return figures mislead
Planning tools that apply a fixed average return every year cannot show this risk at all, because a constant return has no sequence to go wrong.
Projections that vary returns across many simulated paths reveal a wide spread of outcomes from the same average, and the poorest paths are typically those with weak early years.
The practical consequence is that a plan should be judged by how it behaves under an unfavourable ordering, not by what it produces under an average one. Anyone uncertain how to test that should seek professional advice.