Last Update: 30 November 2024
You decided on a 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.
Success Rate of a 5% Withdrawal Strategy
Let's calculate the success rate of a 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.
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):
The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 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.
Swipe left to see all data
| 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 |
95.60
|
53.30
|
19.76
|
11.11
|
6.73
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
4.40
|
46.70
|
80.24
|
88.89
|
93.27
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
82.29
|
27.55
|
15.59
|
7.31
|
5.69
|
0.00
|
0.00
|
0.00
|
| At least 50% |
47.28
|
16.11
|
13.10
|
6.73
|
4.49
|
0.00
|
0.00
|
0.00
|
| At least 75% |
23.61
|
12.38
|
10.89
|
6.21
|
4.01
|
0.00
|
0.00
|
0.00
|
| At least 100% |
15.10
|
10.88
|
9.27
|
5.85
|
1.60
|
0.00
|
0.00
|
0.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 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 |
95.19
|
62.12
|
34.96
|
21.08
|
13.98
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
4.81
|
37.88
|
65.04
|
78.92
|
86.02
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
82.79
|
42.14
|
27.59
|
13.87
|
11.81
|
0.00
|
0.00
|
0.00
|
| At least 50% |
52.27
|
26.95
|
23.19
|
12.76
|
9.32
|
0.00
|
0.00
|
0.00
|
| At least 75% |
37.00
|
20.71
|
19.26
|
11.79
|
8.32
|
0.00
|
0.00
|
0.00
|
| At least 100% |
24.14
|
18.21
|
16.41
|
11.10
|
3.33
|
0.00
|
0.00
|
0.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 5% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
89.19
|
83.10
|
65.98
|
| Fail Rate(%) |
10.81
|
16.90
|
34.02
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
74.64
|
67.87
|
51.87
|
| At least 50% |
67.78
|
42.94
|
40.25
|
| At least 75% |
49.48
|
32.96
|
30.71
|
| At least 100% |
32.85
|
28.81
|
22.82
|
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 November 2024
5% vs Perpetual/Safe Withdrawal Rates
Let's compare a 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.
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 Jan 1878 |
0.000 Sep 1908 |
0.000 Feb 1910 |
0.000 Mar 2008 |
2.990 Jul 2008 |
5.245 | 6.672 | 8.451 | 9.601 | |
|
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 |
2.612 | 2.961 | 3.552 | 5.172 | ||
|
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 | 1.781 | 1.984 | 3.303 | ||
|
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 | 1.219 | 1.321 | 2.148 | ||
|
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 | 0.860 | 0.952 | 1.523 | ||
|
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 | 0.628 | 0.682 | 1.220 | ||
|
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 | 0.501 | 0.526 | 0.933 | ||
|
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 | 0.430 | 0.453 | 0.654 | ||
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 |
5.033 | 7.145 | 8.355 | 9.605 | |
|
20 Years Worst Period (from) |
0.000 Nov 1926 |
0.000 Feb 1933 |
0.000 Feb 1937 |
0.711 Nov 2004 |
2.382 Nov 2004 |
3.348 | 3.442 | 3.818 | 5.645 | ||
|
30 Years Worst Period (from) |
0.000 Dec 1924 |
0.000 Dec 1924 |
0.000 Apr 1933 |
0.614 Mar 1941 |
1.784 Feb 1941 |
1.989 | 2.068 | 2.416 | 3.622 | ||
|
40 Years Worst Period (from) |
0.000 Dec 1924 |
0.000 Dec 1924 |
0.000 Nov 1929 |
0.880 Aug 1937 |
1.353 May 1936 |
1.456 | 1.570 | 1.749 | 3.034 | ||
|
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 | 1.505 | 2.305 | ||
|
60 Years Worst Period (from) |
0.108 Aug 1925 |
0.417 Aug 1925 |
0.726 Aug 1925 |
0.957 Mar 1936 |
1.084 Mar 1936 |
1.149 | 1.197 | 1.313 | 1.677 | ||
|
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 | 1.226 | 1.429 | ||
|
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 | 1.225 | ||
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 Dec 1974 |
0.000 Dec 1974 |
0.000 Feb 2005 |
0.000 Mar 2008 |
2.990 Jul 2008 |
4.645 | 4.906 | 6.630 | 10.812 | |
|
20 Years Worst Period (from) |
0.000 Aug 1995 |
0.000 Dec 1995 |
0.000 Dec 1996 |
0.711 Nov 2004 |
2.382 Nov 2004 |
3.495 | 4.275 | 5.377 | 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 | 3.785 | 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 November 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
