All World ex-US Stock Market: 4.5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 4.5% 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 4.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 77.18% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.376% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 4.5% Withdrawal Strategy

Let's calculate the success rate of a 4.5% 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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: Dec 1974 - Nov 2024

Swipe left to see all data

4.5% Withdrawal Rate	% Success
4.5% Withdrawal Rate	10 Years	20 Years	30 Years
Success Rate (%) At least 0% Preserved Capital	100.00	99.72	77.18
Fail Rate(%)	0.00	0.28	22.82
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	88.37	66.80
At least 50%	93.56	62.88	59.75
At least 75%	62.58	51.52	56.85
At least 100%	39.71	43.49	56.43

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 November 2024

4.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 4.5% 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: Dec 1974 - Nov 2024

Table Chart

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	7.402
	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	7.310

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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

Success Rate of a 4.5% Withdrawal Strategy

4.5% vs Perpetual/Safe Withdrawal Rates

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