The FIRE Sequence Risk Nobody Models for Roth Conversion Ladders

Episode 105 of The FIRE Podcast with Fexingo tackles a hidden danger in the Roth conversion ladder strategy: the sequence-of-returns risk that strikes during the five-year waiting period. Lucas and Luna break down a real scenario—a retiree with a $1.2 million traditional IRA who converts $50,000 annually, only to watch a 2008-style market drop erase the converted portfolio's value before the ladder matures. They walk through the math of how a 30% drawdown in year two creates a $15,000 shortfall in accessible funds, and why the standard FIRE literature glosses over this gap. The episode ends with a practical hedge: staggering conversions with a cash buffer equal to two years of expenses, and running Monte Carlo simulations that stress-test the ladder rather than the total portfolio. Specific, actionable, and grounded in actual numbers—no platitudes. #FIRE #RothConversionLadder #SequenceOfReturnsRisk #EarlyRetirement #TaxPlanning #IRA #RetirementWithdrawal #FinancialIndependence #FexingoBusiness #BusinessPodcast #Finance #PortfolioRisk #MonteCarloSimulation #CashBuffer #RetirementPlanning #TaxStrategy #LeanFIRE #CoastFIRE Keep every episode free: buymeacoffee.com/fexingo