The Keep is the portfolio value you need today—before withdrawing this year's living expenses—to fund the years ahead and still reach your long-term goal.
The Keep Calculator™ is an on-line, non-downloadable software calculator for retirement planning — providing temporary use of on-line non-downloadable software for providing online retirement calculators for individual consumers.
Two retirees can have identical average returns over 30 years and end up in completely different places, depending on when the bad years hit. This is sequence of returns risk — one of the most important and least explained concepts in retirement planning.
During the accumulation years, the order of your investment returns mostly doesn't matter. If you're contributing consistently and you have a bad year followed by good years, the down year reduces your balance but the good years rebuild it. Time and continued contributions work in your favor.
Retirement changes the math fundamentally. When you're drawing down a portfolio instead of adding to it, the order of returns matters a lot. A bad sequence of returns early in retirement can permanently damage a portfolio in ways that a better later sequence can't fully repair.
Here's the core problem: when the market falls early in retirement, you're withdrawing from a smaller base. Those withdrawals are permanent — the shares you sold at low prices aren't there to recover when prices rise. The portfolio is depleted not just by the market loss but by the combination of the loss and the withdrawal.
The reverse is also true. If you have strong early returns and bad years later, the early growth builds a cushion. By the time the bad years arrive, the portfolio is large enough to absorb them without depleting.
Two retirees with the same 30-year average return can end up with dramatically different outcomes if one got the good years first and the other got the bad years first. The averages look identical in retrospect, but the retirement experiences were completely different.
Sequence of returns risk is concentrated in the early years of retirement — roughly the first 10 to 15 years. During this window, the portfolio is at its largest, withdrawals are pulling out the most shares, and there are the most remaining years for a loss to compound into a shortfall.
A 20% loss at age 80, in a portfolio that's already much smaller, matters far less than a 20% loss at age 62 in a full portfolio. By the time guaranteed income from Social Security covers most spending, the portfolio's role may have already been reduced enough that a market decline doesn't cause the same damage.
Sequence of returns risk is why short-term reserves — cash, CDs, short-term bonds — matter in retirement. Holding a few years of spending in safe assets means that when the market falls, you can cover your living costs without selling growth investments at low prices. The growth bucket stays invested and can recover. The short-term reserve absorbs the bad years.
This is the "two-bucket" or "three-bucket" approach to retirement income: separate your money by when you need it, with near-term needs in safe assets and long-term money in growth assets.
Guaranteed income — Social Security, a pension — also provides structural protection against sequence risk. If $27,000 of your $54,000 annual spending is covered by Social Security, you only need to pull $27,000 from the portfolio each year. In a bad market year, you're selling fewer shares at the lower price. The smaller the portfolio's required contribution to your spending, the less vulnerable you are to bad early returns.
The Keep is a deterministic tool — it uses one assumed return and doesn't model the path of returns. This means it can't predict the impact of a bad sequence. That's a real limitation, and it's why many people use Monte Carlo tools alongside the Keep. Monte Carlo explicitly models many different return sequences and reports the probability of success across all of them.
What the Keep can do is give you a floor: if your balance is above the Keep, the scenario is funded under your return assumption. If you know your Keep and you check it each year, you'll see immediately if a bad market year has pushed you below the line — and you can respond proportionally, before a temporary setback becomes a permanent gap.
See your short-term reserve and your Keep in the same place.
Run your numbers in the Keep Calculator →This article is educational and is not individualized financial, tax, or investment advice. Investment returns are uncertain, and past performance does not guarantee future results.