What is sequence-of-returns risk and why does it matter more when I'm about to retire?

Sequence-of-returns risk is the danger that the order of good and bad years, not just the average, wrecks a portfolio you're drawing from. While you're accumulating and not withdrawing, order barely matters. But once you're pulling money out, a big loss in the first few years is devastating, because you're selling shares at low prices to fund spending, leaving fewer shares to recover when the market rebounds.

Two retirees with identical average returns can have wildly different outcomes purely based on whether the crash came early or late. This is why the years just before and after retirement are the 'danger zone.' Defenses include holding a few years of spending in cash and bonds so you don't sell stocks low, using flexible withdrawals that shrink in bad years, and starting retirement with a more conservative allocation, then letting it drift back toward stocks.