Gold Portfolio: 8% withdrawal simulation

Last Update: 31 October 2024

You decided on a 8% withdrawal strategy and implemented the Gold Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 8% withdrawal strategy, you would have lived on your investiment for 30 years in the 1.75% of cases, and for 50 years in the 0% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 1.062% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 8% Withdrawal Strategy

Let's calculate the success rate of a 8% 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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

Swipe left to see all data

8% Withdrawal Rate	% Success
8% Withdrawal Rate	10 Years	20 Years	30 Years	40 Years	50 Years	60 Years	70 Years	80 Years
Success Rate (%) At least 0% Preserved Capital	82.17	13.19	1.75	0.00	0.00	0.00	0.00	0.00
Fail Rate(%)	17.83	86.81	98.25	100.00	100.00	100.00	100.00	100.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	41.69	9.40	0.00	0.00	0.00	0.00	0.00	0.00
At least 50%	22.87	7.47	0.00	0.00	0.00	0.00	0.00	0.00
At least 75%	16.39	5.23	0.00	0.00	0.00	0.00	0.00	0.00
At least 100%	9.44	3.05	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 1924 - Oct 2024

Swipe left to see all data

8% Withdrawal Rate	% Success
8% Withdrawal Rate	10 Years	20 Years	30 Years	40 Years	50 Years	60 Years	70 Years	80 Years
Success Rate (%) At least 0% Preserved Capital	79.93	22.06	3.09	0.00	0.00	0.00	0.00	0.00
Fail Rate(%)	20.07	77.94	96.91	100.00	100.00	100.00	100.00	100.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	41.17	15.71	0.00	0.00	0.00	0.00	0.00	0.00
At least 50%	34.51	12.49	0.00	0.00	0.00	0.00	0.00	0.00
At least 75%	26.18	8.74	0.00	0.00	0.00	0.00	0.00	0.00
At least 100%	15.08	5.10	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

Swipe left to see all data

8% Withdrawal Rate	% Success
8% Withdrawal Rate	10 Years	20 Years	30 Years
Success Rate (%) At least 0% Preserved Capital	65.70	21.88	0.00
Fail Rate(%)	34.30	78.12	100.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	43.45	18.84	0.00
At least 50%	32.22	16.34	0.00
At least 75%	22.87	12.47	0.00
At least 100%	16.22	6.37	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

8% vs Perpetual/Safe Withdrawal Rates

Let's compare a 8% 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

Table Chart

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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

Legend:

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

Legend:

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

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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

Success Rate of a 8% Withdrawal Strategy

8% vs Perpetual/Safe Withdrawal Rates

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