US Intermediate Term (3-7y) Treasuries: 3% withdrawal simulation

Last Update: 30 April 2024

You decided on a 3% withdrawal strategy and invested in the US Intermediate Term (3-7y) Treasuries 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 US Intermediate Term (3-7y) Treasuries asset class.

With a 3% withdrawal strategy, you would have lived on your investiment for 30 years in the 90.75% of cases, and for 50 years in the 40.45% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.453% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 3% Withdrawal Strategy

Let's calculate the success rate of a 3% Withdrawal Strategy, on the US Intermediate Term (3-7y) Treasuries 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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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3%
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
90.75
68.63
40.45
21.77
19.08
18.39
Fail Rate(%)
0.00
0.00
9.25
31.37
59.55
78.23
80.92
81.61
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
93.50
72.86
45.63
27.56
16.95
16.28
15.44
At least 50%
93.72
65.71
48.01
31.45
17.89
15.17
13.79
12.49
At least 75%
67.23
49.34
35.45
22.12
13.62
12.67
10.69
9.53
At least 100%
41.72
36.54
28.56
17.19
9.67
11.69
8.29
8.74
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1924 - Apr 2024
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3%
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
83.71
57.28
26.79
0.00
0.00
0.00
Fail Rate(%)
0.00
0.00
16.29
42.72
73.21
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
89.18
64.09
39.53
10.65
0.00
0.00
0.00
At least 50%
91.95
61.08
45.78
25.94
4.49
0.00
0.00
0.00
At least 75%
63.64
45.37
31.75
21.22
1.16
0.00
0.00
0.00
At least 100%
36.91
32.99
26.63
18.03
0.00
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1974 - Apr 2024
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3%
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%
100.00
96.12
100.00
At least 75%
91.48
91.14
92.95
At least 100%
62.99
77.84
88.38
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US Intermediate Term (3-7y) Treasuries 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

3% vs Perpetual/Safe Withdrawal Rates

Let's compare a 3% 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 1896
0.000
Jan 1910
1.893
May 1941
4.920
May 1941
7.488
Sep 1915
8.357 8.725 9.702 10.919
20 Years
Worst Period (from)
0.000
May 1897
0.000
Jan 1899
0.933
Aug 1939
2.364
Aug 1939
3.652
Feb 1941
4.145 4.598 4.817 5.841
30 Years
Worst Period (from)
0.000
May 1890
0.000
Jun 1939
0.739
May 1940
1.626
Nov 1940
2.453
Feb 1941
2.801 3.044 3.455 4.077
40 Years
Worst Period (from)
0.000
Feb 1933
0.000
Nov 1938
0.145
Sep 1941
0.998
Aug 1941
1.826
Feb 1941
2.059 2.236 2.773 3.257
50 Years
Worst Period (from)
0.000
Feb 1931
0.210
Jun 1934
0.733
Jun 1934
1.189
Jun 1939
1.506
Feb 1941
1.709 1.782 2.364 2.824
60 Years
Worst Period (from)
0.608
Oct 1915
0.839
Aug 1939
1.020
Aug 1939
1.201
Aug 1939
1.377
Feb 1941
1.527 1.609 2.072 2.457
70 Years
Worst Period (from)
0.234
Aug 1911
0.635
May 1911
1.028
May 1911
1.188
Aug 1939
1.304
Feb 1941
1.428 1.492 1.825 2.145
80 Years
Worst Period (from)
0.428
May 1901
0.751
May 1901
1.048
Jun 1939
1.150
Jun 1939
1.251
Feb 1941
1.354 1.412 1.687 1.985
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
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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
May 1936
0.000
Jul 1938
1.893
May 1941
4.920
May 1941
7.798
Feb 1946
8.495 8.794 9.630 10.667
20 Years
Worst Period (from)
0.000
Apr 1932
0.000
Sep 1938
0.933
Aug 1939
2.364
Aug 1939
3.652
Feb 1941
4.015 4.234 4.730 5.612
30 Years
Worst Period (from)
0.000
Oct 1932
0.000
Jun 1939
0.739
May 1940
1.626
Nov 1940
2.453
Feb 1941
2.688 2.814 3.187 3.796
40 Years
Worst Period (from)
0.000
Feb 1933
0.000
Nov 1938
0.145
Sep 1941
0.998
Aug 1941
1.826
Feb 1941
1.988 2.063 2.277 3.099
50 Years
Worst Period (from)
0.000
Feb 1931
0.210
Jun 1934
0.733
Jun 1934
1.189
Jun 1939
1.506
Feb 1941
1.587 1.706 1.780 2.670
60 Years
Worst Period (from)
0.658
Aug 1939
0.839
Aug 1939
1.020
Aug 1939
1.201
Aug 1939
1.377
Feb 1941
1.428 1.514 1.580 2.253
70 Years
Worst Period (from)
0.838
Jul 1939
0.955
Aug 1939
1.072
Aug 1939
1.188
Aug 1939
1.304
Feb 1941
1.336 1.386 1.458 1.855
80 Years
Worst Period (from)
0.846
Jun 1939
0.947
Jun 1939
1.048
Jun 1939
1.150
Jun 1939
1.251
Feb 1941
1.274 1.293 1.365 1.475
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 2011
0.702
Nov 2013
3.750
Nov 2013
6.798
Nov 2013
9.085
Dec 1976
9.631 9.879 10.476 11.898
20 Years
Worst Period (from)
0.000
Jul 2003
1.399
Oct 2003
2.816
Jul 2003
4.217
Jun 2003
5.606
Jun 2003
5.886 6.140 6.385 7.286
30 Years
Worst Period (from)
1.714
Nov 1993
2.538
Nov 1993
3.361
Oct 1993
4.182
Oct 1993
4.831
Dec 1976
5.007 5.061 5.179 5.998
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of US Intermediate Term (3-7y) Treasuries 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:
US Intermediate Term (3-7y) Treasuries Asset Class

For the US Intermediate Term (3-7y) Treasuries 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