Five to ten years from retiring, the question is no longer average return. It is what a crash would cost you in dollars, and when it would hit. Here is how to check, with real crash data.
Your portfolio is too aggressive if a realistic crash would change your retirement date or your spending. Volatility on its own is not the problem. The problem is a large loss landing at the moment you need the money.
Ten years out, a 30% drop is painful but there is time to recover. Two years out, the same drop can mean selling holdings at low prices to fund living costs. So the test changes as retirement gets closer. Ask how much you could lose in dollars, and how many years of planned withdrawals that loss represents.
Convert every percentage into money. The table uses peak-to-trough declines from Exent’s data, as of Sep 30, 2026, applied to an illustrative $500,000 held entirely in one asset.
| Crisis | S&P 500 (SPY) | On $500,000 | US bonds (AGG) | On $500,000 |
|---|---|---|---|---|
| Global financial crisis, 2007–09 | −56.5% | −$282,000 | −14.6% | −$73,000 |
| COVID crash, 2020 | −34.1% | −$171,000 | −9.6% | −$48,000 |
| Inflation bear market, 2022 | −25.4% | −$127,000 | −15.9% | −$79,000 |
| Tariff selloff, 2025 | −19.0% | −$95,000 | −1.8% | −$9,000 |
Illustrative dollar figures, rounded. Mixing the two changes the picture. In Exent’s hypothetical backtest of a 60/40 mix of SPY and AGG, rebalanced monthly from July 2016 to September 2026:
| Monthly data, Jul 2016–Sep 2026 | S&P 500 (SPY) | 60/40 SPY/AGG | 60/40 on $500,000 |
|---|---|---|---|
| COVID drop, 2020 | −19.4% | −11.5% | −$57,500 |
| Calendar year 2022 | −18.2% | −15.8% | −$79,000 |
| Largest drawdown | −23.9% | −20.0% | −$100,000 |
| Annual growth rate | 15.2% | 9.5% |
Monthly data smooths out the worst days, so these drops look smaller than the peak-to-trough figures above. The pattern still holds: the bond share cut the COVID loss by about 40%, but helped far less in 2022, when bonds and stocks fell together. More on that in is the 60/40 portfolio dead? and on the 60/40 strategy page.
Sequence risk is the danger that bad years arrive early in retirement, while you are withdrawing. Without withdrawals, the order of returns does not change the end result. With withdrawals, it does, because you sell more shares when prices are low.
Illustrative: $1,000,000, $50,000 withdrawn at the start of each year, the same three returns in a different order.
| Order of returns | After 3 years, no withdrawals | After 3 years, with withdrawals |
|---|---|---|
| −20%, +10%, +10% (crash first) | $968,000 | $804,100 |
| +10%, +10%, −20% (crash last) | $968,000 | $835,600 |
Same returns, $31,500 apart after three years. Illustrative only, not a forecast. The gap grows with bigger losses and longer periods.
Start with a crash replay on your actual holdings. You can do it by hand with the steps in our portfolio stress test guide. Apply each holding’s fall in 2008, 2020 and 2022 to its current value, add the results, and note which positions drive most of the loss.
The right stock share for you depends on your spending, pensions, Social Security timing, taxes and health. Those are personal decisions. A fee-only, fiduciary financial planner can help you weigh them. See also asset allocation by age.
It is too risky if a crash like 2008 or 2022 would force you to delay retirement or sell at low prices. Replay those crashes on your holdings and compare the dollar loss with your planned withdrawals.
In Exent’s hypothetical backtest, a 60/40 mix of SPY and AGG rebalanced monthly lost 15.8% in calendar 2022, against 18.2% for SPY. Bonds fell alongside stocks that year.
It is the risk that large losses arrive early in retirement while you are withdrawing money. You sell more shares at low prices, so the portfolio may not recover as fully as it would without withdrawals.
That is a personal decision that depends on your spending, other income and taxes. Historically, bonds cushioned some crashes, such as 2020, but not the 2022 bear market. A fee-only planner can help you decide.
Multiply your stock share by a past crash. The S&P 500 fell about 56% peak to trough in 2007–09 in Exent’s data, so $300,000 in stocks would have dropped by roughly $169,000 (illustrative).
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.