All World ex-US Stock Market: 4% withdrawal simulation

Last Update: 31 October 2024

You decided on a 4% withdrawal strategy and invested in the All World ex-US Stock Market asset class: how likely, so far, your investment would have been enough for your retirement?.

In this post, we will simulate different retirement timeframes and check the sustainability of the withdrawal rate, using actual historical series.

Key Points

You invested in the All World ex-US Stock Market asset class.

With a 4% withdrawal strategy, you would have lived on your investiment for 30 years in the 86.31% of cases

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.376% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.

Success Rate of a 4% Withdrawal Strategy

Let's calculate the success rate of a 4% Withdrawal Strategy, on the All World ex-US Stock Market asset class. Would you have also saved a portion of your invested capital, at the end of your retirement?

As usual, the withdrawal is expressed as a yearly rate and refers to the initial capital. After that, the withdrawal amount is monthly adjusted for inflation.

▼ Methodology and Definitions
The algorithm calculates the chance of success of a initial withdrawal rate, whose amount in dollars is adjusted monthly for inflation. The algorithm tries a retirement simulation, starting at every possible month in the given period.
For instance, assuming a 20 years retirement, the algorithm will cover each 20 year timeframe starting at every possible month in the given period between the start and end month.

Here's how simulations work (each simulation is based on actual asset class returns, in US dollars):
  • At the beginning, you start with a certain amount of money invested in the portfolio (i.e. the initial invested capital).
  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.
  • Each month, portfolio value is updated, based on the asset classes returns (dividends are supposed to be reinvested).
  • Each month, portfolio is rebalanced, to reset to the original weight of the assets (applicable only if portfolio contains at least 2 assets).
  • Each month, the withdrawal is adjusted for inflation (US Inflation is used for simulation).
The Withdrawal Rates calculated here are annualized and refer to the initial capital (not the current!). The first month withdrawal is 1/12 of that annualized withdrawal and it's adjusted for inflation for each subsequent month.

The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.

The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.

Learn more about Withdrawal Rate simulation
Data Sources and Credits

We are calculating the success rate over all the past N-year timeframes, on actual historical data, also focusing on how much capital (inflation adjusted) will remain after the retirement.

Period: Nov 1974 - Oct 2024
Swipe left to see all data
4%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
86.31
Fail Rate(%)
0.00
0.00
13.69
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
95.01
75.93
At least 50%
98.13
80.06
66.80
At least 75%
69.02
57.62
58.92
At least 100%
44.70
46.81
56.85
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of All World ex-US Stock Market Asset Class | Preserved capital and withdrawals are considered adjusted for inflation | Withdrawals happen monthly | Performances are calculated in USD dollars, considering reinvestment of dividends when applicable | Inflation is updated at October 2024

4% vs Perpetual/Safe Withdrawal Rates

Let's compare a 4% withdrawal with the Safe and Perpetual Withdrawal Rates, over different timeframes.

In the table below, the guaranteed thresholds of Success/Preserved Capital are highlighted in green, elsewhere in red. To focus on a specific timeframe for this portfolio, click on the links in the table.

Period: Nov 1974 - Oct 2024
Swipe left to see all data
PWR (%) - Perpetual Withdrawal Rate
SWR (%) - Safe Withdrawal Rate
Preserved Capital (Infl.Adj) 100% 75% 50% 25% 0% 0% 0% 0% 0%
Success Rate 100% 100% 100% 100% 100% 95% 90% 80% 50%
Timeframes 10 Years
Worst Period (from) 		0.000
Oct 1988 		0.126
Mar 1999 		3.482
Nov 2007 		5.421
Nov 2007 		7.361
Nov 2007 		8.619 9.259 10.033 11.752
20 Years
Worst Period (from) 		0.000
Nov 1988 		0.000
Mar 1989 		1.558
Mar 1989 		3.131
Mar 1989 		4.476
Jan 1990 		4.934 5.235 5.782 7.416
30 Years
Worst Period (from) 		1.230
Jan 1989 		1.815
Jan 1989 		2.374
Jan 1990 		2.875
Jan 1990 		3.376
Jan 1990 		3.620 3.849 4.364 7.313
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of All World ex-US Stock Market Asset Class | Preserved capital and withdrawals are considered adjusted for inflation | Withdrawals happen monthly | Performances are calculated in USD dollars, considering reinvestment of dividends when applicable | Inflation is updated at October 2024

Related Pages

Asset Class Main Page:
All World ex-US Stock Market Asset Class

For the All World ex-US Stock Market Asset Class, we have prepared a report for each available timeframe:
10-Year    20-Year    30-Year   

if you want to learn more about the statistics of a specific withdrawal rate, we suggest these in particular:
2%    2.5%    3%    3.5%    4%    4.5%    5%   

Website Homepage:
BestRetirementPortfolio.com