Gold Portfolio: 3.5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 3.5% withdrawal strategy and implemented the Gold Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 3.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 43.71% of cases, and for 50 years in the 10.67% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 1.062% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.

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 3.5% Withdrawal Strategy

Let's calculate the success rate of a 3.5% Withdrawal Strategy, on the Gold Portfolio. 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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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3.5%
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
78.41
43.71
16.17
10.67
1.24
0.00
0.00
Fail Rate(%)
0.00
21.59
56.29
83.83
89.33
98.76
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
97.68
54.76
29.25
9.00
9.70
0.09
0.00
0.00
At least 50%
61.55
42.87
13.38
6.36
7.30
0.00
0.00
0.00
At least 75%
41.11
27.57
7.67
5.93
5.93
0.00
0.00
0.00
At least 100%
23.80
17.80
2.02
3.95
4.09
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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3.5%
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
79.71
49.23
28.29
22.13
2.91
0.00
0.00
Fail Rate(%)
0.00
20.29
50.77
71.71
77.87
97.09
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
96.95
58.17
38.76
17.06
20.13
0.21
0.00
0.00
At least 50%
60.04
50.68
22.35
12.07
15.14
0.00
0.00
0.00
At least 75%
42.18
38.40
13.56
11.23
12.31
0.00
0.00
0.00
At least 100%
35.34
27.68
3.57
7.49
8.49
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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3.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
75.90
27.39
Fail Rate(%)
0.00
24.10
72.61
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
93.14
56.51
12.45
At least 50%
59.25
47.65
0.41
At least 75%
44.28
32.13
0.00
At least 100%
31.60
26.32
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Gold Portfolio | 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

3.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 3.5% 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 review 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 1879 		0.000
Jun 1896 		0.000
Jun 1910 		1.266
Jul 1980 		4.590
Feb 1980 		6.906 7.484 8.103 9.412
20 Years
Worst Period (from) 		0.000
Dec 1884 		0.000
May 1890 		0.000
Jun 1897 		0.000
Feb 1980 		1.726
Feb 1980 		3.109 3.256 3.459 4.965
30 Years
Worst Period (from) 		0.000
Jun 1878 		0.000
May 1886 		0.000
Feb 1889 		0.539
Jul 1897 		1.062
Feb 1980 		1.902 2.036 2.136 3.173
40 Years
Worst Period (from) 		0.000
Jun 1875 		0.000
Sep 1877 		0.000
Jan 1879 		0.579
Feb 1980 		0.912
Feb 1980 		1.424 1.497 1.698 2.365
50 Years
Worst Period (from) 		0.000
Jan 1871 		0.000
Jan 1871 		0.000
Jun 1878 		0.630
Sep 1896 		1.107
Jul 1897 		1.242 1.329 1.378 1.820
60 Years
Worst Period (from) 		0.000
Jan 1871 		0.000
Jan 1871 		0.000
May 1892 		0.306
Jul 1897 		0.887
Jul 1897 		0.993 1.059 1.138 1.425
70 Years
Worst Period (from) 		0.000
Jul 1875 		0.000
Jun 1878 		0.000
Oct 1885 		0.162
Jul 1897 		0.710
Jul 1897 		0.781 0.851 0.943 1.167
80 Years
Worst Period (from) 		0.000
Jan 1871 		0.000
Jul 1873 		0.000
Jul 1878 		0.203
Mar 1890 		0.611
Jul 1897 		0.657 0.737 0.812 1.004
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
Feb 1933 		0.000
Nov 1936 		0.000
Jan 1980 		1.266
Jul 1980 		4.590
Feb 1980 		7.240 7.550 8.000 9.357
20 Years
Worst Period (from) 		0.000
Apr 1932 		0.000
Feb 1933 		0.000
Feb 1934 		0.000
Feb 1980 		1.726
Feb 1980 		2.924 3.247 3.494 5.014
30 Years
Worst Period (from) 		0.000
May 1929 		0.000
Nov 1932 		0.000
Feb 1933 		0.602
Aug 1940 		1.062
Feb 1980 		1.898 2.034 2.140 3.384
40 Years
Worst Period (from) 		0.000
Nov 1924 		0.000
Jul 1930 		0.247
Feb 1980 		0.579
Feb 1980 		0.912
Feb 1980 		1.464 1.498 1.765 2.852
50 Years
Worst Period (from) 		0.000
Dec 1947 		0.339
Sep 1949 		0.699
Mar 1935 		1.009
Mar 1935 		1.277
Feb 1934 		1.331 1.370 1.635 2.550
60 Years
Worst Period (from) 		0.000
Feb 1933 		0.000
Jan 1938 		0.175
Apr 1941 		0.683
Apr 1941 		1.149
Apr 1934 		1.183 1.200 1.242 2.074
70 Years
Worst Period (from) 		0.000
Feb 1933 		0.000
Mar 1933 		0.302
Apr 1933 		0.661
Apr 1933 		0.992
May 1934 		1.020 1.037 1.067 1.567
80 Years
Worst Period (from) 		0.395
Jan 1936 		0.539
Jan 1936 		0.682
Dec 1934 		0.808
Feb 1934 		0.928
Feb 1934 		0.949 0.965 0.995 1.220
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 1974 		0.000
Aug 1979 		0.000
Jan 1980 		1.266
Jul 1980 		4.590
Feb 1980 		6.635 7.189 7.528 9.621
20 Years
Worst Period (from) 		0.000
Nov 1974 		0.000
Dec 1974 		0.000
Nov 1978 		0.000
Feb 1980 		1.726
Feb 1980 		2.472 2.835 3.218 4.941
30 Years
Worst Period (from) 		0.000
Nov 1974 		0.000
Nov 1974 		0.146
Feb 1980 		0.604
Feb 1980 		1.062
Feb 1980 		1.439 1.913 2.274 2.893
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Gold Portfolio | 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

Portfolio Main Page:
Gold Portfolio

For the Gold Portfolio, 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