Last Update: 30 September 2024
You decided on a 7% withdrawal strategy and invested in the US T-Bills (1-3mths) 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 7% Withdrawal Strategy
Let's calculate the success rate of a 7% Withdrawal Strategy, on the US T-Bills (1-3mths) 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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
7% 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
|
22.54
|
9.69
|
5.12
|
3.37
|
2.49
|
1.09
|
0.00
|
Fail Rate(%) |
0.00
|
77.46
|
90.31
|
94.88
|
96.63
|
97.51
|
98.91
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
77.29
|
15.57
|
7.81
|
4.47
|
2.89
|
1.87
|
0.30
|
0.00
|
At least 50% |
33.26
|
10.02
|
6.19
|
3.81
|
2.25
|
1.42
|
0.00
|
0.00
|
At least 75% |
17.67
|
8.03
|
4.37
|
3.29
|
1.61
|
0.80
|
0.00
|
0.00
|
At least 100% |
8.86
|
5.85
|
3.50
|
2.93
|
0.64
|
0.44
|
0.00
|
0.00
|
7% 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
|
2.50
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
Fail Rate(%) |
0.00
|
97.50
|
100.00
|
100.00
|
100.00
|
100.00
|
100.00
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
70.77
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 50% |
13.32
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 75% |
1.94
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 100% |
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
7% Withdrawal Rate |
% Success
|
||
---|---|---|---|
10 Years | 20 Years | 30 Years | |
Success Rate (%) At least 0% Preserved Capital |
100.00
|
2.77
|
0.00
|
Fail Rate(%) |
0.00
|
97.23
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
At least 25% |
79.83
|
0.00
|
0.00
|
At least 50% |
14.35
|
0.00
|
0.00
|
At least 75% |
0.00
|
0.00
|
0.00
|
At least 100% |
0.00
|
0.00
|
0.00
|
7% vs Perpetual/Safe Withdrawal Rates
Let's compare a 7% 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 (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 Jan 1908 |
0.000 Apr 1933 |
1.029 Mar 1941 |
4.151 Mar 1941 |
7.253 Feb 1941 |
8.039 | 8.933 | 9.396 | 10.772 | |
20 Years Worst Period (from) |
0.000 Jun 1900 |
0.000 Dec 1930 |
0.194 Jun 1933 |
1.895 May 1933 |
3.258 Nov 1940 |
3.631 | 3.928 | 5.054 | 5.648 | ||
30 Years Worst Period (from) |
0.000 Sep 1923 |
0.000 Jan 1931 |
0.318 Apr 1933 |
1.246 May 1933 |
2.172 May 1933 |
2.274 | 2.663 | 3.663 | 3.992 | ||
40 Years Worst Period (from) |
0.000 Mar 1911 |
0.000 Mar 1932 |
0.339 Nov 1940 |
0.996 Nov 1940 |
1.615 May 1933 |
1.706 | 1.969 | 2.708 | 3.123 | ||
50 Years Worst Period (from) |
0.000 May 1927 |
0.000 Mar 1931 |
0.308 May 1933 |
0.792 May 1933 |
1.276 May 1933 |
1.366 | 1.555 | 2.126 | 2.578 | ||
60 Years Worst Period (from) |
0.000 Mar 1932 |
0.150 May 1933 |
0.466 May 1933 |
0.781 May 1933 |
1.097 May 1933 |
1.195 | 1.260 | 1.743 | 2.259 | ||
70 Years Worst Period (from) |
0.034 Apr 1933 |
0.271 Apr 1933 |
0.509 Apr 1933 |
0.747 May 1933 |
0.984 May 1933 |
1.068 | 1.106 | 1.460 | 1.962 | ||
80 Years Worst Period (from) |
0.000 Feb 1933 |
0.196 Jun 1933 |
0.430 May 1933 |
0.663 May 1933 |
0.897 May 1933 |
0.968 | 0.988 | 1.313 | 1.769 |
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 1931 |
0.000 Apr 1933 |
1.029 Mar 1941 |
4.151 Mar 1941 |
7.253 Feb 1941 |
7.837 | 8.865 | 9.284 | 10.297 | |
20 Years Worst Period (from) |
0.000 Apr 1927 |
0.000 Dec 1930 |
0.194 Jun 1933 |
1.895 May 1933 |
3.258 Nov 1940 |
3.549 | 3.659 | 4.578 | 5.358 | ||
30 Years Worst Period (from) |
0.000 Oct 1924 |
0.000 Jan 1931 |
0.318 Apr 1933 |
1.246 May 1933 |
2.172 May 1933 |
2.245 | 2.283 | 2.719 | 3.745 | ||
40 Years Worst Period (from) |
0.000 Mar 1928 |
0.000 Mar 1932 |
0.339 Nov 1940 |
0.996 Nov 1940 |
1.615 May 1933 |
1.678 | 1.708 | 2.004 | 2.993 | ||
50 Years Worst Period (from) |
0.000 May 1927 |
0.000 Mar 1931 |
0.308 May 1933 |
0.792 May 1933 |
1.276 May 1933 |
1.352 | 1.366 | 1.516 | 2.350 | ||
60 Years Worst Period (from) |
0.000 Mar 1932 |
0.150 May 1933 |
0.466 May 1933 |
0.781 May 1933 |
1.097 May 1933 |
1.163 | 1.185 | 1.217 | 1.845 | ||
70 Years Worst Period (from) |
0.034 Apr 1933 |
0.271 Apr 1933 |
0.509 Apr 1933 |
0.747 May 1933 |
0.984 May 1933 |
1.035 | 1.061 | 1.083 | 1.399 | ||
80 Years Worst Period (from) |
0.000 Feb 1933 |
0.196 Jun 1933 |
0.430 May 1933 |
0.663 May 1933 |
0.897 May 1933 |
0.936 | 0.952 | 0.972 | 1.077 |
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 2000 |
0.702 Aug 2012 |
3.593 Jul 2012 |
6.431 Dec 2008 |
9.060 Dec 2008 |
9.198 | 9.352 | 9.621 | 10.681 | |
20 Years Worst Period (from) |
0.000 Dec 1996 |
0.021 Jul 2002 |
1.548 Jul 2002 |
3.057 Dec 2002 |
4.535 Dec 2003 |
4.596 | 4.648 | 5.054 | 5.756 | ||
30 Years Worst Period (from) |
0.000 Aug 1991 |
0.634 Aug 1992 |
1.645 Aug 1992 |
2.644 May 1994 |
3.612 Oct 1994 |
3.646 | 3.668 | 3.807 | 4.233 |
Related Pages
Asset Class Main Page:
US T-Bills (1-3mths) Asset Class
For the US T-Bills (1-3mths) 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