US T-Bills (1-3mths): 7.5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 7.5% 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.

Key Points

You invested in the US T-Bills (1-3mths) asset class.

With a 7.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 7.4% of cases, and for 50 years in the 1.84% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.172% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 7.5% Withdrawal Strategy

Let's calculate the success rate of a 7.5% 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.

▼ 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Oct 2024
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7.5%
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
99.02
18.23
7.40
3.80
1.84
0.00
0.00
0.00
Fail Rate(%)
0.98
81.77
92.60
96.20
98.16
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
67.28
11.64
6.05
3.15
1.28
0.00
0.00
0.00
At least 50%
27.27
8.96
4.03
2.78
0.40
0.00
0.00
0.00
At least 75%
13.55
6.35
3.09
2.12
0.00
0.00
0.00
0.00
At least 100%
6.77
4.29
2.56
1.46
0.00
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Nov 1924 - Oct 2024
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7.5%
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
98.43
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Fail Rate(%)
1.57
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
55.69
0.00
0.00
0.00
0.00
0.00
0.00
0.00
At least 50%
10.45
0.00
0.00
0.00
0.00
0.00
0.00
0.00
At least 75%
0.00
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
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Nov 1974 - Oct 2024
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7.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
0.00
0.00
Fail Rate(%)
0.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
65.07
0.00
0.00
At least 50%
8.52
0.00
0.00
At least 75%
0.00
0.00
0.00
At least 100%
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US T-Bills (1-3mths) 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 October 2024

7.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 7.5% 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.

Period: Jan 1871 - Oct 2024
Period: Nov 1924 - Oct 2024
Period: Nov 1974 - Oct 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
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 5.646
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 3.662 3.991
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 1.301 1.766
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 1931 		0.000
Apr 1933 		1.029
Mar 1941 		4.151
Mar 1941 		7.253
Feb 1941 		7.837 8.865 9.284 10.292
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 5.354
30 Years
Worst Period (from) 		0.000
Nov 1924 		0.000
Jan 1931 		0.318
Apr 1933 		1.246
May 1933 		2.172
May 1933 		2.245 2.283 2.719 3.744
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
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 2000 		0.702
Aug 2012 		3.593
Jul 2012 		6.431
Dec 2008 		9.060
Dec 2008 		9.198 9.351 9.578 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 4.631 5.036 5.756
30 Years
Worst Period (from) 		0.000
Aug 1991 		0.634
Aug 1992 		1.645
Aug 1992 		2.639
Nov 1994 		3.603
Nov 1994 		3.644 3.668 3.805 4.233
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of US T-Bills (1-3mths) 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 October 2024

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