Why Your Retirement Account Isn't Growing as Fast as You Think

Your financial advisor says your account averages 10% per year. Sounds great, right? But here's something most people don't realize: average returns and actual returns are not the same thing.

The Math That Surprises Everyone

Imagine you invest $100,000:

• Year 1: You gain 100%. Balance: $200,000
• Year 2: You lose 50%. Balance: $100,000

Your average return? 25%. That sounds incredible.

Your actual return? 0%. Your money went absolutely nowhere.

This isn't a trick question. This is how math actually works when returns are volatile. It's called sequence of returns risk, and it affects every retirement account exposed to market ups and downs.

Why This Matters for Retirement

When you're saving for retirement, you're not just looking at averages. You're living through the actual year-by-year reality. The order of your returns matters enormously. A big loss early in retirement can devastate your portfolio in ways that a later recovery can't fix.

What You Can Do About It

Understanding this gap is the first step. The second step is exploring strategies that protect you from the downside while still participating in growth. Indexed strategies, for example, offer a floor (typically 0%) that protects your money in down years while still allowing you to earn when the market goes up.

It's not what you earn that matters. It's what you keep.