Last Update: 30 November 2024
You decided on a 2.5% withdrawal strategy and invested in the US Long Term (20y+) 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.
Success Rate of a 2.5% Withdrawal Strategy
Let's calculate the success rate of a 2.5% Withdrawal Strategy, on the US Long Term (20y+) 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.
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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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
| 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
|
96.98
|
77.85
|
64.18
|
36.26
|
33.13
|
29.73
|
| Fail Rate(%) |
0.00
|
0.00
|
3.02
|
22.15
|
35.82
|
63.74
|
66.87
|
70.27
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
100.00
|
95.27
|
75.81
|
67.25
|
41.19
|
27.30
|
25.89
|
24.89
|
| At least 50% |
97.05
|
67.97
|
62.30
|
47.59
|
35.26
|
22.34
|
21.33
|
22.75
|
| At least 75% |
64.41
|
58.64
|
52.15
|
36.99
|
30.21
|
18.09
|
18.75
|
21.62
|
| At least 100% |
50.75
|
46.77
|
41.33
|
27.63
|
24.60
|
15.69
|
17.76
|
19.48
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 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
|
94.65
|
57.98
|
32.28
|
4.99
|
0.00
|
0.00
|
| Fail Rate(%) |
0.00
|
0.00
|
5.35
|
42.02
|
67.72
|
95.01
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
100.00
|
92.09
|
59.22
|
42.44
|
21.30
|
0.00
|
0.00
|
0.00
|
| At least 50% |
96.67
|
57.54
|
48.63
|
33.70
|
15.14
|
0.00
|
0.00
|
0.00
|
| At least 75% |
56.80
|
52.76
|
41.74
|
29.96
|
13.98
|
0.00
|
0.00
|
0.00
|
| At least 100% |
47.83
|
43.50
|
39.00
|
26.77
|
12.65
|
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
| 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% |
100.00
|
100.00
|
100.00
|
| At least 75% |
92.52
|
99.45
|
100.00
|
| At least 100% |
87.53
|
92.52
|
100.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US Long Term (20y+) 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 November 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.
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 1897 |
0.000 Jan 1909 |
0.190 Oct 1971 |
4.347 Oct 1971 |
7.606 Apr 1916 |
8.212 | 8.528 | 9.157 | 11.381 | |
|
20 Years Worst Period (from) |
0.000 Apr 1897 |
0.000 Oct 1898 |
0.000 Sep 1961 |
1.995 Oct 1961 |
3.622 Feb 1941 |
3.929 | 4.191 | 4.628 | 5.884 | ||
|
30 Years Worst Period (from) |
0.000 Feb 1890 |
0.000 Dec 1937 |
0.000 Mar 1950 |
1.212 Apr 1950 |
2.276 Feb 1946 |
2.558 | 2.726 | 2.956 | 4.113 | ||
|
40 Years Worst Period (from) |
0.000 Jun 1930 |
0.000 Apr 1934 |
0.000 Nov 1939 |
0.328 Oct 1941 |
1.553 Feb 1946 |
1.736 | 2.001 | 2.366 | 3.304 | ||
|
50 Years Worst Period (from) |
0.000 Nov 1929 |
0.000 Mar 1930 |
0.101 Oct 1931 |
0.906 Jun 1934 |
1.241 Feb 1941 |
1.417 | 1.554 | 2.025 | 2.725 | ||
|
60 Years Worst Period (from) |
0.112 Jul 1922 |
0.662 May 1941 |
0.823 Dec 1940 |
0.979 Feb 1941 |
1.135 Jan 1941 |
1.295 | 1.357 | 1.768 | 2.334 | ||
|
70 Years Worst Period (from) |
0.000 Nov 1910 |
0.073 Oct 1911 |
0.704 Oct 1911 |
0.977 Feb 1941 |
1.081 Jan 1941 |
1.228 | 1.283 | 1.610 | 2.062 | ||
|
80 Years Worst Period (from) |
0.000 Feb 1901 |
0.175 Oct 1901 |
0.696 Oct 1901 |
0.994 Feb 1941 |
1.049 Jan 1941 |
1.189 | 1.247 | 1.669 | 1.929 | ||
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 Oct 1936 |
0.000 Nov 1940 |
0.190 Oct 1971 |
4.347 Oct 1971 |
7.634 Feb 1946 |
8.301 | 8.541 | 8.956 | 11.056 | |
|
20 Years Worst Period (from) |
0.000 Sep 1932 |
0.000 Sep 1938 |
0.000 Sep 1961 |
1.995 Oct 1961 |
3.622 Feb 1941 |
3.812 | 3.960 | 4.296 | 5.387 | ||
|
30 Years Worst Period (from) |
0.000 Sep 1932 |
0.000 Dec 1937 |
0.000 Mar 1950 |
1.212 Apr 1950 |
2.276 Feb 1946 |
2.496 | 2.584 | 2.786 | 3.437 | ||
|
40 Years Worst Period (from) |
0.000 Jun 1930 |
0.000 Apr 1934 |
0.000 Nov 1939 |
0.328 Oct 1941 |
1.553 Feb 1946 |
1.686 | 1.743 | 2.026 | 2.614 | ||
|
50 Years Worst Period (from) |
0.000 Nov 1929 |
0.000 Mar 1930 |
0.101 Oct 1931 |
0.906 Jun 1934 |
1.241 Feb 1941 |
1.354 | 1.410 | 1.540 | 2.202 | ||
|
60 Years Worst Period (from) |
0.478 Dec 1934 |
0.662 May 1941 |
0.823 Dec 1940 |
0.979 Feb 1941 |
1.135 Jan 1941 |
1.214 | 1.282 | 1.341 | 1.866 | ||
|
70 Years Worst Period (from) |
0.663 Feb 1941 |
0.768 Feb 1941 |
0.872 Feb 1941 |
0.977 Feb 1941 |
1.081 Jan 1941 |
1.138 | 1.202 | 1.257 | 1.530 | ||
|
80 Years Worst Period (from) |
0.787 Nov 1943 |
0.870 Apr 1941 |
0.933 Apr 1941 |
0.994 Feb 1941 |
1.049 Jan 1941 |
1.092 | 1.118 | 1.198 | 1.291 | ||
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 Nov 2013 |
3.151 Dec 2014 |
6.285 Mar 1975 |
7.960 Jan 1977 |
8.636 | 9.750 | 11.495 | 12.828 | |
|
20 Years Worst Period (from) |
0.808 Nov 2003 |
2.423 Nov 2003 |
3.985 Nov 2004 |
4.907 Jan 1977 |
5.475 Jan 1977 |
5.816 | 6.050 | 7.145 | 8.099 | ||
|
30 Years Worst Period (from) |
2.546 Nov 1993 |
3.368 Nov 1993 |
4.074 Jan 1977 |
4.372 Jan 1977 |
4.669 Jan 1977 |
4.937 | 5.012 | 5.831 | 6.938 | ||
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of US Long Term (20y+) 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 November 2024
Related Pages
Asset Class Main Page:
US Long Term (20y+) Treasuries Asset Class
For the US Long Term (20y+) 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
