Why does sequence-of-returns risk make the early years of FIRE the most dangerous?

Sequence-of-returns risk is the danger that poor market returns arrive early in retirement, right when your portfolio is largest and you are selling assets to live. Withdrawing during a downturn locks in losses and leaves fewer shares to recover, so two retirees with identical average returns can have wildly different outcomes based purely on the order those returns arrive.

Early retirees face this most acutely because they have decades ahead and no paycheck to lean on. Defenses include keeping a cash or bond buffer to avoid selling stocks in a slump, staying flexible to trim spending after a bad year, using a slightly lower initial withdrawal rate, and sometimes a rising-equity glidepath. It is the main reason a long-horizon FIRE plan should not simply set-and-forget a 4% withdrawal.