Last Update: 28 February 2023
You decided on a 4.5% 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 4.5% Withdrawal Strategy
Let's calculate the success rate of a 4.5% 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too. In this website, you can find PWRs with 100% Capital Protection, or less.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money. In this website, you can find SWRs with 100% Success rate, or less.
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.
| 4.5% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
82.67
|
43.90
|
24.80
|
10.59
|
7.59
|
7.80
|
| Fail Rate(%) |
17.33
|
56.10
|
75.20
|
89.41
|
92.41
|
92.20
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
82.67
|
43.90
|
24.80
|
10.59
|
7.59
|
7.80
|
| At least 25% |
52.74
|
36.06
|
16.78
|
7.74
|
7.14
|
7.40
|
| At least 50% |
47.26
|
29.11
|
12.03
|
6.44
|
6.87
|
7.09
|
| At least 75% |
36.86
|
23.93
|
11.06
|
5.87
|
6.50
|
6.48
|
| At least 100% |
32.20
|
19.36
|
9.73
|
5.05
|
6.14
|
6.38
|
| 4.5% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
72.11
|
38.41
|
15.40
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
27.89
|
61.59
|
84.60
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
72.11
|
38.41
|
15.40
|
0.00
|
0.00
|
0.00
|
| At least 25% |
49.12
|
32.58
|
9.57
|
0.00
|
0.00
|
0.00
|
| At least 50% |
44.95
|
24.38
|
8.32
|
0.00
|
0.00
|
0.00
|
| At least 75% |
35.69
|
21.17
|
8.04
|
0.00
|
0.00
|
0.00
|
| At least 100% |
30.18
|
19.62
|
7.35
|
0.00
|
0.00
|
0.00
|
| 4.5% Withdrawal Rate |
% Success
|
|
|---|---|---|
| 20 Years | 30 Years | |
| Success Rate (%) |
100.00
|
95.02
|
| Fail Rate(%) |
0.00
|
4.98
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |
| At least 0% |
100.00
|
95.02
|
| At least 25% |
98.06
|
93.36
|
| At least 50% |
93.63
|
78.84
|
| At least 75% |
80.06
|
73.86
|
| At least 100% |
68.98
|
68.46
|
4.5% vs Perpetual/Safe Withdrawal Rates
Let's compare a 4.5% 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.
|
PWR (%) - Perpetual Withdrawal Rate
|
SWR (%) - Safe Withdrawal Rate
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Preserved Capital | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
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 | 4.171 | 4.621 | 5.810 | |
|
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 |
2.556 | 2.722 | 2.955 | 4.075 | ||
|
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 |
1.735 | 1.993 | 2.362 | 3.286 | ||
|
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 |
1.413 | 1.544 | 2.002 | 2.712 | ||
|
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 |
1.294 | 1.353 | 1.753 | 2.330 | ||
|
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 | 1.282 | 1.598 | 2.070 | ||
|
PWR (%) - Perpetual Withdrawal Rate
|
SWR (%) - Safe Withdrawal Rate
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Preserved Capital | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
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) |
0.308 Jun 1924 |
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 | ||
|
PWR (%) - Perpetual Withdrawal Rate
|
SWR (%) - Safe Withdrawal Rate
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Preserved Capital | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
20 Years Worst Period (from) |
1.706 Nov 2002 |
2.974 Mar 1973 |
3.570 Mar 1973 |
4.166 Mar 1973 |
4.762 Mar 1973 |
5.715 | 5.827 | 6.969 | 8.099 | |
|
30 Years Worst Period (from) |
2.897 Mar 1973 |
3.175 Mar 1973 |
3.453 Mar 1973 |
3.732 Mar 1973 |
4.010 Mar 1973 |
4.503 | 4.909 | 5.053 | 6.898 | ||
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:
20-Year
30-Year
40-Year
50-Year
60-Year
70-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