**two**components: Portfolio volatility and relatively level withdrawals. If there is no portfolio volatility, there can be no SOR issue. If there are no withdrawals (or deposits, as there is SOR impact for those in accumulation), there can be no SOR issue. Both must be present in order for sequence of return issues to exist.

**If either is missing then the commutative property controls and sequence does not matter**.

Much as been publicized about reducing volatility. I myself utilized a "bond tent" in early retirement because I had relatively thin safety margins and sought to minimize portfolio volatility in the early years of retirement. But I have not seen a published evaluation looking at the

**side:**

*withdrawal*Here is the simple (not great in practice) way to eliminate all SOR risk:

**If withdrawals are proportional to portfolio size, there can be no sequence of return issue.**The commutative property of multiplication applies and the sequence of returns is immaterial. So a fixed percent of portfolio withdrawal removes all SOR risk.

Examples with fixed, 5% of portfolio balance annual withdrawal:

Sequence 1 - Early poor performance, 3 down years(-20%), followed by 27 up years (+7%).

*Note: the 5% withdrawal subtracts from the annual percentage of portfolio change - i.e. down years are down 25% (-20%-5%) and up years are up 2% (7%-5%).*

Starting Portfolio Balance * .75

^{3}* 1.02

^{27}= Ending portfolio balance

Sequence 2 - Late poor performance, 27 up years (+7%), followed by 3 down years (-20%)

Starting Portfolio Balance * 1.02

^{27}* .75

^{3}= Ending portfolio balance

Anyone with a knowledge of basic math will recognize that (.75

^{3}* 1.02

^{27}) = (1.02

^{27}* .75

^{3})

Again, I want to state for the record that this is not a recommended withdrawal strategy for the typical retiree, it is an inductive evaluation of Sequence of Return. But intuitively, this would suggest that reducing withdrawals in down years and increasing withdrawals in up years would reduce SOR impact.