In retirement, the average rate of return on your assets over time is not as important as when—and how big—the fluctuations are in those assets. If you have negative returns on your portfolio early into retirement, it reduces the principle available to recover from such downturns when big positive years follow. This is commonly known as sequence of returns risk (SORR), and the potential impact on a portfolio is truly jawdropping. You have likely seen the illustrations comparing two separate portfolios that start with $250k or $500k while assuming identical rates of return and withdrawal amounts over a 30-year period. They show that one portfolio may be depleted within the first 15 or 20 years while the other ends up leaving a healthy estate to heirs which is larger than the orginal investment—a difference due solely to the SORR. Recently, aging boomers with college-aged children are seeing this risk increase due to an unexpected combination—slumping equity markets, a sour economy and soaring higher education costs.

One component of the SORR trifecta is equity market performance. At this writing some $7.8T has vaporized from the global value of stocks in the worst market start to a year on record. The DJIA lost more than 1,500 points in just 10 days. The market loss in the U.S. alone would equate to Google, Facebook, Intel, Netflix and Yahoo simply disappearing.

A second component is the economy. According to data released by the U.S. Census Bureau early last year, all but the wealthiest Americans are still struggling to overcome the prolonged economic slump as household incomes remain below pre-recession highs while the cost of living continues to climb. Per the 2014 data released by the Russell Sage Foundation, from 2007 to 2013, median household wealth fell by a whopping 43 percent, from $98,872 to $56,335. Unemployment has also forced many families to raid or deplete their savings. In addition, the cost of health care has continued to skyrocket, and according to the Common Wealth Fund, 82 percent of Americans devoted 20 percent or more of their incomes to insurance premiums in 2013, spending an average of $16,000 per year. That’s almost double what families paid for health insurance just a decade ago.

The third component magnifying SORR for many aging boomers is that higher education costs are acting as premature retirement withdrawals. And those withdrawals are mushrooming. To attend a flagship university in my home state of Colorado, in-state families must be prepared to spend around $30,000 annually for total costs, while non-residents must be prepared to spend closer to $50,000 annually. With an average household income in Colorado of about $58,000 per year, most students must either borrow heavily to afford college, rely on their parents’ savings or both. And what if parents are trying to send two children to college? Or more? What if students also wish to attend graduate school in the future? For flagship schools, these costs can easily amount to multiple hundreds of thousands of dollars—amounts that most families can only muster if they are willing to make retirement fund or contribution trade-offs. 

The upshot of all of this economic pressure is that it is forcing many middle and upper-middle income families to literally choose between saving for their retirements and sending their children to college. And if they choose the latter, the SORR hits them hard. A study released by Kaplan Test Prep found that three out of every five parents are putting less money away for retirement to meet college costs. According to T. Rowe Price’s Financial Trade-offs Survey, some parents have decided to put off retirement for another five or 10 years. A shocking 49 percent of parents even said they don’t believe they’ll be able to retire at all. No wonder many families still believe the recession has not ended.