What I Told ET Wealth About Retiring Into a Market Crash
By Sagar Saroy
Yesterday, ET Wealth published a story by Abhinav Kaul on four people who stopped working close to the 2024 market peak and how they have lived through the fall since. I was one of them. You can read the full piece here: Market crash after retirement: four retirees share lessons on how to prepare in advance.
The article had room for a few of my lines. This post is the longer answer, because the risk it describes has a name most retirees never hear until it is too late: sequence of returns risk.
What I told ET Wealth
I gave Abhinav one scenario. Say you retired in January 2008 with ₹1 crore and needed ₹75,000 a month. The market fell about 60% over the next 14 months and took almost three years to recover. You still have a house to run, so you keep selling units at whatever depressed price the market offers. Even when the market recovers, you cannot fully come back.
Here is why. When prices fall 60%, every unit is worth 40% of what it was. To raise the same ₹75,000, you now have to sell two and a half times as many units. Those units are gone. They will not be there when the market recovers.
I lived through 2008 myself. I ran SIPs for nearly four years through that crash, and it taught me two things I have never forgotten. Projections are not promises. And a corpus pays you nothing until you sell it.
The risk has a name: sequence of returns
While you are earning, the order of returns does not matter. A rupee compounded through the same set of returns ends at the same value whatever the order.
The moment withdrawals begin, order is everything. ET Wealth cited an example from Otto Money: two retirees start with ₹1 crore, earn identical average returns of around 9% over 30 years, and withdraw the same inflation-adjusted amount. The only difference is that one faces the five worst years early and the other faces them at the end. The first runs out of money in year 24. The second ends year 30 with nearly ₹4.85 crore.
Same returns. Same withdrawals. Opposite outcomes. That is sequence of returns risk, and it is highest in the first five to ten years of retirement, when your corpus is largest and withdrawals have just begun.
What the last two years actually showed
ET Wealth also compared how ₹1 crore would have fared across eight asset mixes from 26 September 2024, the Nifty 500 Total Return Index peak, to 6 October 2026. The returns of the building blocks over that period:
| Asset | Return, 26 Sep 2024 to 6 Oct 2026 |
|---|---|
| Indian equity (Nifty 500 TRI) | -7.61% |
| Debt (average active bond fund) | 12.18% |
| International equity (S&P 500) | 36.09% |
| Gold (Nippon India ETF Gold BeES) | 90.97% |
A classic 60:40 equity and debt portfolio ended at about ₹1,00,31,000. It barely moved in two years. The equal-thirds portfolio, one third each in equity, debt and gold, ended at about ₹1,31,45,000 and beat every other mix.
If that sounds familiar, it should. It is a modern version of the Talmud's rule of thirds, the 1,700-year-old idea of dividing your money into three. One caution: two years of gold outperforming is not a law of nature. Next time, a different third may do the heavy lifting. The lasting lesson is not "buy gold". It is "do not let one asset decide when your bills get paid".
Why I chose a different structure
Diversification spreads the risk. It does not remove the need to sell. Every one of those eight portfolios still has to sell something to pay the monthly bills.
That is why I exited mutual funds years before I retired and moved into assets that pay me every month without being sold, mainly rental property. My equity exposure is a professionally managed PMS set aside for my children's weddings, and I do not touch it. When the market fell, my spending did not change, because nothing in my monthly budget depended on market prices.
I reached financial freedom at 45, then spent five more years in corporate life building the systems, legal structures and succession plan around that income before stepping away in 2023. The structure was built before it was needed. That is the whole point.
Three questions to answer before your last Salary
- How many years of expenses can I pay without selling equity? The retirees in the ET story kept anywhere from two to eight years of expenses in safe assets. Know your number.
- What is my withdrawal rate? In a simulation by Samasthiti Advisors, a retiree withdrawing 5% a year from ₹1 crore starting in 1992 ran out of money after 20 years. One withdrawing 3% survived all 30 years and ended with more than ₹2 crore.
- What share of my expenses is paid by income that arrives without selling anything? That is your Freedom Score: monthly income from assets ÷ monthly expenses. At 100%, a market crash changes your net worth but not your life.
The danger is not the fall
Markets will fall again. Nobody can choose the year they retire into. What you can choose is whether a fall forces you to sell.
As I told ET Wealth: the danger in retirement is not a market falling; it is being forced to sell when it does.
I wrote The Last Salary: Cash Flow, Not Corpus to show how to build income that removes that danger, step by step. Get the ebook on Amazon or read the free chapter at TheLastSalary.com.
Frequently asked questions
What is sequence of returns risk?
Sequence of returns risk is the danger that poor market returns early in retirement permanently deplete a portfolio, even if long-term average returns look fine. Withdrawals made during a fall sell units at low prices, and those units cannot recover.
When is sequence of returns risk highest?
It is highest in the first five to ten years of retirement, when the corpus is largest and withdrawals have just begun.
How many years of expenses should a retiree keep out of equity?
There is no single number. The retirees featured by ET Wealth kept between two and eight years of expenses in safe assets, depending on their withdrawal rate and other income.
What is a safe withdrawal rate in India?
It depends on your corpus, expenses and inflation. In one simulation of a retiree starting in 1992, a 3% withdrawal rate lasted 30 years while a 5% rate ran out after 20, so lower is safer.
Did the equal-thirds portfolio really beat the others?
In ET Wealth's comparison from September 2024 to October 2026, a portfolio split equally between Indian equity, debt and gold grew ₹1 crore to about ₹1.31 crore and beat seven other mixes. Gold's strong run drove much of that, and future periods may differ.
Disclaimer: This article is for education only and is not financial advice. Please consult a certified financial expert before making investment decisions.