Commodities: 2.5% withdrawal simulation

Last Update: 31 March 2024

You decided on a 2.5% withdrawal strategy and invested in the Commodities 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 Commodities asset class.

With a 2.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 66.22% of cases, and for 50 years in the 21.85% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 1.259% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 2.5% Withdrawal Strategy

Let's calculate the success rate of a 2.5% Withdrawal Strategy, on the Commodities 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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: Jan 1871 - Mar 2024
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2.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years 40 Years 50 Years 60 Years 70 Years 80 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
97.00
66.22
38.31
21.85
13.04
0.00
0.00
Fail Rate(%)
0.00
3.00
33.78
61.69
78.15
86.96
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
91.86
67.81
44.05
30.37
20.97
11.52
0.00
0.00
At least 50%
79.07
53.06
29.05
26.62
19.92
6.43
0.00
0.00
At least 75%
47.44
32.00
24.59
21.25
18.47
4.38
0.00
0.00
At least 100%
26.16
24.38
22.97
17.50
17.58
2.41
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Apr 1924 - Mar 2024
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2.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years 40 Years 50 Years 60 Years 70 Years 80 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
78.72
55.48
44.43
30.35
0.00
0.00
Fail Rate(%)
0.00
0.00
21.28
44.52
55.57
69.65
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
91.95
72.74
56.60
53.40
43.26
26.82
0.00
0.00
At least 50%
78.91
61.71
47.56
50.21
41.10
14.97
0.00
0.00
At least 75%
53.01
47.24
43.28
40.08
38.10
10.19
0.00
0.00
At least 100%
40.43
40.58
40.43
33.01
36.27
5.61
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Apr 1974 - Mar 2024
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2.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
81.91
88.09
81.74
At least 50%
75.68
75.62
73.86
At least 75%
68.40
66.48
67.63
At least 100%
53.64
55.96
60.58
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Commodities 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 March 2024

2.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 2.5% 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: Jan 1871 - Mar 2024
Period: Apr 1924 - Mar 2024
Period: Apr 1974 - Mar 2024
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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
Jan 1878
0.000
Sep 1908
0.000
Feb 1910
0.000
Mar 2008
2.990
Jul 2008
5.307 6.779 8.481 9.622
20 Years
Worst Period (from)
0.000
Dec 1884
0.000
May 1890
0.000
Feb 1899
0.439
May 1911
1.853
Feb 1916
2.637 2.997 3.567 5.188
30 Years
Worst Period (from)
0.000
Feb 1878
0.000
May 1888
0.000
Sep 1889
0.223
May 1901
1.259
Feb 1916
1.664 1.779 1.984 3.299
40 Years
Worst Period (from)
0.000
Dec 1873
0.000
Jun 1878
0.000
Feb 1880
0.000
Feb 1916
0.851
Feb 1916
1.171 1.217 1.320 2.141
50 Years
Worst Period (from)
0.000
Jan 1871
0.000
Jan 1871
0.000
Feb 1871
0.000
Feb 1899
0.604
Feb 1916
0.822 0.859 0.951 1.521
60 Years
Worst Period (from)
0.000
Jan 1871
0.000
Jan 1871
0.000
Jan 1871
0.000
Feb 1892
0.469
Feb 1916
0.599 0.627 0.682 1.215
70 Years
Worst Period (from)
0.000
Jan 1871
0.000
Jan 1871
0.000
Jul 1873
0.000
Aug 1887
0.419
Feb 1916
0.488 0.500 0.525 0.926
80 Years
Worst Period (from)
0.000
Jan 1871
0.000
Jan 1871
0.000
Jan 1871
0.000
Feb 1878
0.392
Sep 1896
0.415 0.429 0.452 0.650
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
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
Feb 1933
0.000
Aug 1936
0.000
Feb 2005
0.000
Mar 2008
2.990
Jul 2008
5.455 7.524 8.412 9.605
20 Years
Worst Period (from)
0.000
Nov 1926
0.000
Feb 1933
0.000
Feb 1937
0.881
Nov 2000
2.521
Apr 2004
3.360 3.452 3.841 5.645
30 Years
Worst Period (from)
0.000
Apr 1924
0.000
Apr 1924
0.000
Apr 1933
0.614
Mar 1941
1.784
Feb 1941
1.989 2.068 2.416 3.593
40 Years
Worst Period (from)
0.000
Apr 1924
0.000
Apr 1924
0.000
Nov 1929
0.880
Aug 1937
1.353
May 1936
1.456 1.570 1.749 3.000
50 Years
Worst Period (from)
0.000
Oct 1926
0.086
Apr 1936
0.447
Apr 1936
0.808
Apr 1936
1.168
May 1936
1.256 1.352 1.487 2.176
60 Years
Worst Period (from)
0.108
Aug 1925
0.417
Aug 1925
0.726
Aug 1924
0.957
Mar 1936
1.084
Mar 1936
1.149 1.197 1.309 1.644
70 Years
Worst Period (from)
0.260
May 1950
0.685
May 1950
0.912
Apr 1936
0.975
Apr 1936
1.038
Mar 1936
1.090 1.109 1.223 1.416
80 Years
Worst Period (from)
0.000
Apr 1940
0.101
May 1940
0.466
May 1940
0.790
Mar 1936
1.002
Mar 1936
1.026 1.062 1.092 1.204
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
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
Aug 1974
0.000
Nov 1974
0.000
Feb 2005
0.000
Mar 2008
2.990
Jul 2008
4.718 5.033 7.136 10.820
20 Years
Worst Period (from)
0.000
Aug 1995
0.000
Dec 1995
0.000
Dec 1996
0.881
Nov 2000
2.521
Apr 2004
4.058 4.590 5.446 6.938
30 Years
Worst Period (from)
0.000
Jan 1989
0.000
Jan 1990
0.000
Apr 1990
0.762
Oct 1990
2.816
Oct 1990
3.277 3.396 3.966 5.768
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Commodities 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 March 2024

Related Pages

Asset Class Main Page:
Commodities Asset Class

For the Commodities Asset Class, we have prepared a report for each available timeframe:
10-Year    20-Year    30-Year    40-Year    50-Year    60-Year    70-Year    80-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