US Small Cap: 40-year retirement

Last Update: 28 February 2023

Do you have in mind a 40 years retirement, investing in the US Small Cap asset class?

According to the historical returns and stats of the asset class, which has been a sustainable withdrawal rate to live off your investiment?

Worst case scenario so far, over a 40-year time horizon, you could have withdrawn 3.058% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 40 years.

Considering the last 40 years (last update: February 2023), a safe withdrawal rate would have been 11.72%.

The last 40 years of the US Small Cap asset class

Over the last 40 years (last update: February 2023), the asset class has returned 12.35% annualized, with a maximum drawdown of -54.13%.

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.

A Perpetual Withdrawal Rate (PWR) protected the original inflation adjusted capital.

A Safe Withdrawal Rate (SWR) didn't protect the original capital, but the investment didn't run out of money during retirement. The capital went to zero exaclty at the end of the retirement period.

Learn more about Withdrawal Rate simulation
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Timeframes ending at Feb 2023
Withdrawal Rate (%)
Investment Performances
Timeframe Period from Period to Perpetual Safe Ann.Return(%)
[ Infl.Adj. ]		 Max
Drawdown(%)
40 Years 1 Mar 1983
 28 Feb 2023 11.380 11.720 12.35
[ 9.25 ] 		-54.13
Jun 2007 - Feb 2009
Simulations are calculated with actual returns of US Small Cap 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 January 2023

For a complete view of the asset class and all the possible strategies, please refer to US Small Cap page.

Withdrawal Rates Simulation (updated at Feb 2023)

How much would it be an acceptable withdrawal rate, for the US Small Cap asset class?

Analyzing the available data source, all the 40-years timeframes have been considered to calculate the withdrawal rates and their success percentage.

Legend:
SWR 100% Success
PWR 100% Capital Protection
Period: Jan 1871 - Feb 2023
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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%
Minimum
Worst Period (from) 		2.229
Jun 1892 		2.958
Jun 1892 		3.010
Sep 1929 		3.034
Sep 1929 		3.058
Sep 1929 		4.129
95% Succ. 		4.509
90% Succ. 		5.451
80% Succ. 		8.033
50% Succ.
Median 7.740
 7.828
 7.909
 7.970
 8.033
Average 8.215
 8.313
 8.412
 8.511
 8.609
Maximum
Best Period (from) 		26.405
Jul 1932 		26.434
Jul 1932 		26.464
Jul 1932 		26.493
Jul 1932 		26.522
Jul 1932
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Key
Withdrawal
Rates (%) 		Success Rate
100% 95% 90% 80% 50%
Preserved Capital 100% 2.229
 3.591
 4.005
 4.823
 7.740
75% 2.958
 3.739
 4.151
 4.923
 7.828
50% 3.010
 3.866
 4.292
 5.081
 7.909
25% 3.034
 4.007
 4.416
 5.282
 7.970
0% 3.058
 4.129
 4.509
 5.451
 8.033
Period: Mar 1923 - Feb 2023
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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%
Minimum
Worst Period (from) 		2.963
Sep 1929 		2.986
Sep 1929 		3.010
Sep 1929 		3.034
Sep 1929 		3.058
Sep 1929 		5.096
95% Succ. 		6.187
90% Succ. 		7.457
80% Succ. 		10.241
50% Succ.
Median 10.093
 10.130
 10.167
 10.204
 10.241
Average 10.366
 10.407
 10.449
 10.490
 10.532
Maximum
Best Period (from) 		26.405
Jul 1932 		26.434
Jul 1932 		26.464
Jul 1932 		26.493
Jul 1932 		26.522
Jul 1932
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Key
Withdrawal
Rates (%) 		Success Rate
100% 95% 90% 80% 50%
Preserved Capital 100% 2.963
 4.909
 6.017
 7.335
 10.093
75% 2.986
 4.934
 6.058
 7.364
 10.130
50% 3.010
 4.981
 6.106
 7.396
 10.167
25% 3.034
 5.038
 6.152
 7.427
 10.204
0% 3.058
 5.096
 6.187
 7.457
 10.241
Simulations are calculated with actual returns of US Small Cap 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 January 2023

Withdrawals and Success Rate

If you had implemented a specific Withdrawal Strategy with the US Small Cap asset class, over 40 years, which would have been the success rate so far?

Simulations follow the same rules mentioned before. Withdrawals are expressed as yearly rates and refer to the initial capital. After that, withdrawal amount is monthly adjusted for inflation.

Success rates are calculated over all 40-year timeframes available in the data source. To focus on a specific withdrawal rate, click on the links in the table.

Period: Jan 1871 - Feb 2023
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Withdrawal
Rate
40 Years
% Fail
% Success over 40 Years - on % Preserved Capital
% Success Percentile No Capital
Preserved		 0%
Preserved 		25%
Preserved 		50%
Preserved 		75%
Preserved 		100%
Preserved
2.00 %
100.00
0.00
100.00
100.00
100.00
100.00
100.00
2.50 %
100.00
0.00
100.00
100.00
100.00
100.00
99.85
3.00 %
100.00
100% Succ.
3.058% 		0.00
100.00
100.00
100.00
99.85
99.11
3.50 %
99.70
0.30
99.70
99.63
99.18
97.70
96.36
4.00 %
97.03
95% Succ.
4.129% 		2.97
97.03
95.10
92.65
91.76
90.20
4.50 %
90.13
90% Succ.
4.509% 		9.87
90.13
88.86
87.75
86.27
83.52
5.00 %
85.15
80% Succ.
5.451% 		14.85
85.15
83.37
81.29
79.29
77.58
5.50 %
78.99
21.01
78.99
77.21
74.54
72.75
70.30
6.00 %
72.61
27.39
72.61
70.60
67.71
65.18
63.47
6.50 %
65.70
34.30
65.70
63.10
61.40
60.50
59.47
7.00 %
60.06
39.94
60.06
58.95
57.98
57.09
56.57
7.50 %
55.09
44.91
55.09
54.27
53.53
53.16
52.78
8.00 %
50.33
49.67
50.33
49.29
48.63
47.29
46.40
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Mar 1923 - Feb 2023
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Withdrawal
Rate
40 Years
% Fail
% Success over 40 Years - on % Preserved Capital
% Success Percentile No Capital
Preserved		 0%
Preserved 		25%
Preserved 		50%
Preserved 		75%
Preserved 		100%
Preserved
2.00 %
100.00
0.00
100.00
100.00
100.00
100.00
100.00
2.50 %
100.00
0.00
100.00
100.00
100.00
100.00
100.00
3.00 %
100.00
100% Succ.
3.058% 		0.00
100.00
100.00
100.00
99.86
99.86
3.50 %
99.45
0.55
99.45
99.45
99.45
99.45
99.45
4.00 %
98.47
1.53
98.47
98.47
98.47
98.47
98.47
4.50 %
96.81
3.19
96.81
96.81
96.81
96.81
96.53
5.00 %
95.28
95% Succ.
5.096% 		4.72
95.28
95.01
94.87
94.87
94.59
5.50 %
93.07
6.93
93.07
92.93
92.37
92.09
91.96
6.00 %
91.12
90% Succ.
6.187% 		8.88
91.12
90.71
90.43
90.15
90.15
6.50 %
87.52
12.48
87.52
87.52
87.10
86.82
86.69
7.00 %
84.60
80% Succ.
7.457% 		15.40
84.60
84.19
84.05
83.91
83.50
7.50 %
79.75
20.25
79.75
79.47
78.78
78.64
78.22
8.00 %
74.48
25.52
74.48
73.65
73.37
73.23
73.09
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US Small Cap 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 January 2023

Related Pages

Asset Class Main Page:
US Small Cap Asset Class

For the US Small Cap 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

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