Total US Stock Market: 2.5% withdrawal simulation

Last Update: 30 April 2024

You decided on a 2.5% withdrawal strategy and invested in the Total 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 Total US Stock Market asset class.

With a 2.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 100% of cases, and for 50 years in the 100% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.895% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 Total 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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: Jan 1871 - Apr 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
100.00
100.00
100.00
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
At least 50%
98.55
99.25
100.00
100.00
100.00
100.00
100.00
100.00
At least 75%
88.50
97.63
99.80
100.00
99.92
100.00
100.00
100.00
At least 100%
80.36
89.82
99.46
99.93
99.92
100.00
100.00
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1924 - Apr 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
100.00
100.00
100.00
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
At least 50%
98.61
99.06
100.00
100.00
100.00
100.00
100.00
100.00
At least 75%
86.77
98.13
99.88
100.00
99.83
100.00
100.00
100.00
At least 100%
79.09
90.84
99.76
99.86
99.83
100.00
100.00
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1974 - Apr 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%
100.00
100.00
100.00
At least 50%
98.75
100.00
100.00
At least 75%
94.18
100.00
100.00
At least 100%
89.60
99.72
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Total 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 April 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 - Apr 2024
Period: May 1924 - Apr 2024
Period: May 1974 - Apr 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
Jun 1908
0.000
Jun 1910
1.421
Jul 1911
3.563
Sep 1929
5.426
Sep 1929
8.369 9.025 10.589 13.904
20 Years
Worst Period (from)
0.000
May 1901
0.860
Jul 1901
1.765
Sep 1929
2.546
Sep 1929
3.326
Sep 1929
5.136 5.481 6.150 8.922
30 Years
Worst Period (from)
1.062
Jun 1902
1.981
Jun 1902
2.619
Sep 1929
2.757
Sep 1929
2.895
Sep 1929
4.369 4.660 5.208 7.415
40 Years
Worst Period (from)
2.492
Sep 1929
2.565
Sep 1929
2.637
Sep 1929
2.710
Sep 1929
2.782
Sep 1929
4.020 4.239 4.742 6.544
50 Years
Worst Period (from)
2.391
Sep 1929
2.466
Sep 1929
2.542
Sep 1929
2.617
Sep 1929
2.693
Sep 1929
3.831 4.045 4.488 5.970
60 Years
Worst Period (from)
2.526
Sep 1929
2.553
Sep 1929
2.581
Sep 1929
2.608
Sep 1929
2.636
Sep 1929
3.898 4.150 4.693 6.030
70 Years
Worst Period (from)
2.581
Sep 1929
2.589
Sep 1929
2.598
Sep 1929
2.606
Sep 1929
2.615
Sep 1929
3.842 4.033 4.654 6.116
80 Years
Worst Period (from)
2.562
Sep 1929
2.573
Sep 1929
2.583
Sep 1929
2.594
Sep 1929
2.605
Sep 1929
3.781 3.974 4.505 5.802
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
Apr 1928
0.000
Sep 1929
1.653
Mar 1999
3.563
Sep 1929
5.426
Sep 1929
8.053 8.902 10.431 13.987
20 Years
Worst Period (from)
0.205
Sep 1929
0.985
Sep 1929
1.765
Sep 1929
2.546
Sep 1929
3.326
Sep 1929
4.960 5.267 6.079 9.035
30 Years
Worst Period (from)
2.343
Sep 1929
2.481
Sep 1929
2.619
Sep 1929
2.757
Sep 1929
2.895
Sep 1929
4.223 4.532 5.261 7.990
40 Years
Worst Period (from)
2.492
Sep 1929
2.565
Sep 1929
2.637
Sep 1929
2.710
Sep 1929
2.782
Sep 1929
3.939 4.193 4.758 7.012
50 Years
Worst Period (from)
2.391
Sep 1929
2.466
Sep 1929
2.542
Sep 1929
2.617
Sep 1929
2.693
Sep 1929
3.738 3.969 4.380 6.154
60 Years
Worst Period (from)
2.526
Sep 1929
2.553
Sep 1929
2.581
Sep 1929
2.608
Sep 1929
2.636
Sep 1929
4.019 4.458 5.017 6.723
70 Years
Worst Period (from)
2.581
Sep 1929
2.589
Sep 1929
2.598
Sep 1929
2.606
Sep 1929
2.615
Sep 1929
3.795 4.427 5.556 7.661
80 Years
Worst Period (from)
2.562
Sep 1929
2.573
Sep 1929
2.583
Sep 1929
2.594
Sep 1929
2.605
Sep 1929
3.316 3.971 4.759 6.635
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
Nov 1998
0.000
Jan 1999
1.653
Mar 1999
4.875
Sep 2000
7.497
Sep 2000
9.350 10.279 11.375 14.650
20 Years
Worst Period (from)
2.010
Apr 2000
2.678
Apr 2000
3.346
Apr 2000
4.014
Apr 2000
4.682
Apr 2000
5.405 6.236 7.975 9.852
30 Years
Worst Period (from)
5.841
Sep 1987
6.097
Sep 1987
6.346
May 1974
6.552
May 1974
6.759
May 1974
7.405 7.679 8.182 8.817
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Total 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 April 2024

Related Pages

Asset Class Main Page:
Total US Stock Market Asset Class

For the Total US Stock Market 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