Last Update: 31 October 2024
You decided on a 5% withdrawal strategy and invested in the US Treasuries (7-10y) 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 5% Withdrawal Strategy
Let's calculate the success rate of a 5% Withdrawal Strategy, on the US Treasuries (7-10y) 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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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
| 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
|
65.46
|
35.71
|
18.14
|
5.69
|
3.82
|
3.18
|
1.58
|
| Fail Rate(%) |
0.00
|
34.54
|
64.29
|
81.86
|
94.31
|
96.18
|
96.82
|
98.42
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
98.49
|
49.53
|
26.77
|
12.80
|
4.01
|
3.46
|
2.28
|
0.34
|
| At least 50% |
67.46
|
37.65
|
22.80
|
10.68
|
3.05
|
2.57
|
1.69
|
0.00
|
| At least 75% |
46.67
|
29.68
|
16.88
|
8.85
|
1.52
|
1.69
|
0.79
|
0.00
|
| At least 100% |
28.43
|
20.04
|
11.37
|
7.90
|
0.08
|
0.80
|
0.30
|
0.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 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
|
65.56
|
30.44
|
10.82
|
0.00
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
0.00
|
34.44
|
69.56
|
89.18
|
100.00
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
98.43
|
44.43
|
22.35
|
9.99
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 50% |
68.27
|
33.51
|
19.14
|
9.29
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 75% |
41.44
|
24.45
|
15.34
|
8.74
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 100% |
22.20
|
13.63
|
9.75
|
8.46
|
0.00
|
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
| 5% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
100.00
|
100.00
|
92.12
|
| Fail Rate(%) |
0.00
|
0.00
|
7.88
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
100.00
|
95.84
|
78.01
|
| At least 50% |
92.31
|
77.29
|
66.80
|
| At least 75% |
73.80
|
59.28
|
53.53
|
| At least 100% |
33.47
|
36.29
|
34.02
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US Treasuries (7-10y) 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
5% vs Perpetual/Safe Withdrawal Rates
Let's compare a 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 Jun 1897 |
0.000 May 1908 |
0.853 Oct 1971 |
4.621 Oct 1971 |
7.493 Sep 1915 |
8.069 | 8.573 | 9.462 | 11.182 | |
|
20 Years Worst Period (from) |
0.000 Feb 1897 |
0.000 Feb 1898 |
0.289 Jul 1900 |
2.260 Feb 1941 |
3.585 May 1941 |
4.023 | 4.277 | 4.561 | 6.002 | ||
|
30 Years Worst Period (from) |
0.000 Jun 1889 |
0.000 Apr 1939 |
0.606 May 1940 |
1.523 Nov 1940 |
2.375 Feb 1941 |
2.692 | 2.952 | 3.173 | 3.926 | ||
|
40 Years Worst Period (from) |
0.000 Jan 1933 |
0.000 May 1938 |
0.000 Apr 1940 |
0.748 Sep 1941 |
1.737 May 1941 |
1.928 | 2.205 | 2.567 | 3.139 | ||
|
50 Years Worst Period (from) |
0.000 Feb 1930 |
0.000 May 1931 |
0.507 Oct 1931 |
1.094 Feb 1941 |
1.405 Feb 1941 |
1.614 | 1.683 | 2.181 | 2.726 | ||
|
60 Years Worst Period (from) |
0.386 Aug 1897 |
0.767 Aug 1897 |
0.963 Dec 1940 |
1.125 Feb 1941 |
1.286 Feb 1941 |
1.459 | 1.520 | 1.882 | 2.311 | ||
|
70 Years Worst Period (from) |
0.000 Mar 1911 |
0.293 Oct 1911 |
0.768 May 1911 |
1.119 Feb 1941 |
1.222 Feb 1941 |
1.368 | 1.429 | 1.660 | 2.005 | ||
|
80 Years Worst Period (from) |
0.000 Jan 1901 |
0.179 Oct 1901 |
0.606 Oct 1901 |
1.019 May 1901 |
1.180 Feb 1941 |
1.297 | 1.366 | 1.472 | 1.870 | ||
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 Aug 1936 |
0.000 Aug 1938 |
0.853 Oct 1971 |
4.621 Oct 1971 |
7.643 Feb 1946 |
8.227 | 8.646 | 9.381 | 10.814 | |
|
20 Years Worst Period (from) |
0.000 Apr 1932 |
0.000 Dec 1936 |
0.842 Aug 1939 |
2.260 Feb 1941 |
3.585 May 1941 |
3.909 | 4.211 | 4.577 | 5.481 | ||
|
30 Years Worst Period (from) |
0.000 Jul 1932 |
0.000 Apr 1939 |
0.606 May 1940 |
1.523 Nov 1940 |
2.375 Feb 1941 |
2.590 | 2.708 | 3.119 | 3.628 | ||
|
40 Years Worst Period (from) |
0.000 Jan 1933 |
0.000 May 1938 |
0.000 Apr 1940 |
0.748 Sep 1941 |
1.737 May 1941 |
1.859 | 1.931 | 2.212 | 2.970 | ||
|
50 Years Worst Period (from) |
0.000 Feb 1930 |
0.000 May 1931 |
0.507 Oct 1931 |
1.094 Feb 1941 |
1.405 Feb 1941 |
1.499 | 1.610 | 1.677 | 2.508 | ||
|
60 Years Worst Period (from) |
0.596 Dec 1934 |
0.795 Aug 1939 |
0.963 Dec 1940 |
1.125 Feb 1941 |
1.286 Feb 1941 |
1.350 | 1.441 | 1.506 | 2.090 | ||
|
70 Years Worst Period (from) |
0.809 Apr 1941 |
0.914 Feb 1941 |
1.016 Feb 1941 |
1.119 Feb 1941 |
1.222 Feb 1941 |
1.268 | 1.323 | 1.402 | 1.733 | ||
|
80 Years Worst Period (from) |
0.858 May 1941 |
0.940 May 1941 |
1.022 May 1941 |
1.103 Feb 1941 |
1.180 Feb 1941 |
1.209 | 1.232 | 1.318 | 1.402 | ||
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 Apr 2012 |
0.575 Nov 2013 |
3.827 Nov 2012 |
6.706 Jan 1975 |
8.494 Jan 1977 |
9.101 | 9.991 | 10.812 | 12.280 | |
|
20 Years Worst Period (from) |
0.494 Nov 2003 |
1.905 Apr 2004 |
3.296 Apr 2004 |
4.687 Apr 2004 |
5.643 Jan 1977 |
5.979 | 6.134 | 6.650 | 7.643 | ||
|
30 Years Worst Period (from) |
2.194 Nov 1993 |
2.980 Nov 1993 |
3.765 Nov 1993 |
4.372 Jan 1977 |
4.719 Jan 1977 |
4.970 | 5.035 | 5.486 | 6.451 | ||
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of US Treasuries (7-10y) 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 Treasuries (7-10y) Asset Class
For the US Treasuries (7-10y) 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
