Our son was born in 2013. My wife had the more stable career at that point, so I became the stay-at-home parent. It was the right call for our family, and I don't regret it for a second.
But let me tell you what it cost me financially, because I think it's a story more people need to hear.
I was out of the workforce — and effectively out of the savings game — from 2013 until I returned to work in 2019. And as anyone who's ever started a business knows, the first few years are rarely profitable. So in reality, I couldn't meaningfully save from 2013 through 2024. Eleven years.
Since the start of 2013, the S&P 500 has returned over 539% including dividends.
I was on the sideline for most of it. But look at that boy.
There's a concept in financial planning called sequence of returns risk. You've probably encountered it if you've spent any time on Bogleheads, or listened to enough retirement podcasts, or fallen down the right Reddit rabbit hole. The standard explanation focuses on retirement: if you hit a bad market in your first few years of withdrawals, you can run out of money even if the market eventually recovers. The order of returns matters, not just the average.
That's true. But it's incomplete.
Because sequence of returns risk doesn't wait for your retirement date. It's present the entire time. The market doesn't care when you have money to invest — it just keeps doing what it does. If you're positioned to participate during the good years, you benefit. If life intervenes and you're not, you don't. And unlike a bad market year, you can't wait for a recovery. Those contribution years are simply gone.
My situation was voluntary. I chose it. But it happens involuntarily too — job loss, a health crisis, a business that fails. And it doesn't only apply to savings. If a large expense forces you to pull money out of the market at the wrong time — a new roof, college tuition, a parent who needs care — the math is the same. The timing of the outflow determines the damage just as much as the amount.
I spent a lot of time thinking about this while developing the Asset Life Matching framework. The whole premise of ALM is that your assets exist to support a specific life — specific obligations, specific timelines, specific consequences if things go wrong. When you think about money that way, sequence of returns risk becomes something you can actually plan around, at least partially.
The short version: if the money you'll need in the next few years isn't in the market to begin with, its "sequence" is irrelevant. You've already decided when it gets used, independent of what the market is doing that day. You've actively chosen the sequence.
The longer version — including a look at what this actually costs in real dollar terms over a working life — is over on the Asset Life Matching site: Sequence of Returns Risk Isn't Just a Retirement Problem.
I don't tell my own story in client meetings to be dramatic. I tell it because I think it's useful. A financial advisor who's lived through real financial consequences — not just studied them — is a different kind of advisor. I know what it feels like to watch a bull market from the outside. I know the math isn't abstract.
And I know that when life throws a curveball (you've heard me say this before), the goal isn't to predict it. It's to have organized your money well enough that the curveball doesn't take everything with it.