Golden Butterfly Portfolio: 2% withdrawal simulation

Last Update: 30 April 2023

You decided on a 2% withdrawal strategy and implemented the Golden Butterfly Portfolio: 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 implemented the Golden Butterfly Portfolio.

With a 2% withdrawal strategy, you would have lived on your investiment for 30 years in the 100% of cases, and for 50 years in the 100% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.589% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 2% Withdrawal Strategy

Let's calculate the success rate of a 2% Withdrawal Strategy, on the Golden Butterfly 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. In this website, you can find PWRs with 100% Capital Protection, or less.

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. In this website, you can find SWRs with 100% Success rate, or less.

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 - Apr 2023
Swipe left to see all data
2%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
100.00
100.00
100.00
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 0%
100.00
100.00
100.00
100.00
100.00
100.00
At least 25%
100.00
100.00
100.00
100.00
100.00
100.00
At least 50%
99.87
100.00
100.00
100.00
100.00
100.00
At least 75%
94.21
99.59
100.00
100.00
100.00
100.00
At least 100%
89.87
92.78
99.85
100.00
100.00
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1923 - Apr 2023
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2%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
100.00
100.00
100.00
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 0%
100.00
100.00
100.00
100.00
100.00
100.00
At least 25%
100.00
100.00
100.00
100.00
100.00
100.00
At least 50%
100.00
100.00
100.00
100.00
100.00
100.00
At least 75%
100.00
100.00
100.00
100.00
100.00
100.00
At least 100%
99.38
100.00
100.00
100.00
100.00
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1973 - Apr 2023
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2%
Withdrawal Rate
% Success
20 Years 30 Years
Success Rate (%)
100.00
100.00
Fail Rate(%)
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 0%
100.00
100.00
At least 25%
100.00
100.00
At least 50%
100.00
100.00
At least 75%
100.00
100.00
At least 100%
100.00
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Golden Butterfly 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 | Portfolio is rebalanced each month | Inflation is updated at April 2023

2% vs Perpetual/Safe Withdrawal Rates

Let's compare a 2% 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 - Apr 2023
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PWR (%) - Perpetual Withdrawal Rate
SWR (%) - Safe Withdrawal Rate
Preserved Capital 100% 75% 50% 25% 0% 0% 0% 0% 0%
Success Rate 100% 100% 100% 100% 100% 95% 90% 80% 50%
Timeframes 20 Years
Worst Period (from)
0.000
Sep 1898
0.192
Jul 1901
1.780
Jul 1901
3.369
Jul 1901
4.543
Jun 1911
5.089 5.383 6.400 7.682
30 Years
Worst Period (from)
0.905
Jul 1890
1.720
Jun 1902
2.429
Jun 1902
3.091
Jul 1901
3.589
Jul 1901
3.980 4.196 4.598 5.954
40 Years
Worst Period (from)
1.848
Jun 1892
2.321
Jun 1892
2.662
Jul 1901
2.908
Jul 1901
3.153
Jul 1901
3.505 3.656 3.909 5.177
50 Years
Worst Period (from)
2.158
Jul 1901
2.343
Jul 1901
2.527
Jul 1901
2.712
Jul 1901
2.897
Jul 1901
3.208 3.355 3.577 4.747
60 Years
Worst Period (from)
2.340
Jul 1901
2.441
Jul 1901
2.541
Jul 1901
2.642
Jul 1901
2.742
Jul 1901
3.017 3.173 3.362 4.350
70 Years
Worst Period (from)
2.357
Jul 1901
2.431
Jul 1901
2.505
Jul 1901
2.579
Jul 1901
2.653
Jul 1901
2.874 3.051 3.219 4.025
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: May 1923 - Apr 2023
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PWR (%) - Perpetual Withdrawal Rate
SWR (%) - Safe Withdrawal Rate
Preserved Capital 100% 75% 50% 25% 0% 0% 0% 0% 0%
Success Rate 100% 100% 100% 100% 100% 95% 90% 80% 50%
Timeframes 20 Years
Worst Period (from)
1.758
Mar 1937
2.625
Mar 1937
3.492
Mar 1937
4.359
Mar 1937
5.216
Feb 1937
6.018 6.478 6.855 7.876
30 Years
Worst Period (from)
2.344
Dec 1936
2.790
Dec 1936
3.236
Dec 1936
3.674
Feb 1937
4.095
Feb 1937
4.758 5.060 5.499 6.174
40 Years
Worst Period (from)
2.458
Feb 1937
2.734
Feb 1937
3.009
Feb 1937
3.285
Feb 1937
3.560
Feb 1937
4.077 4.326 4.826 5.356
50 Years
Worst Period (from)
2.847
Feb 1937
2.956
Feb 1937
3.066
Feb 1937
3.176
Feb 1937
3.286
Feb 1937
3.747 3.947 4.299 4.973
60 Years
Worst Period (from)
2.908
Feb 1937
2.973
Feb 1937
3.038
Feb 1937
3.103
Feb 1937
3.168
Feb 1937
3.574 3.740 4.048 4.754
70 Years
Worst Period (from)
2.963
Feb 1937
2.999
Feb 1937
3.034
Feb 1937
3.069
Feb 1937
3.105
Feb 1937
3.429 3.597 3.792 4.470
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: May 1973 - Apr 2023
Swipe left to see all data
PWR (%) - Perpetual Withdrawal Rate
SWR (%) - Safe Withdrawal Rate
Preserved Capital 100% 75% 50% 25% 0% 0% 0% 0% 0%
Success Rate 100% 100% 100% 100% 100% 95% 90% 80% 50%
Timeframes 20 Years
Worst Period (from)
4.552
May 1998
5.254
May 1998
5.957
May 1998
6.660
May 1998
7.357
Aug 1987
7.551 7.747 8.001 8.567
30 Years
Worst Period (from)
4.789
Aug 1987
5.114
Aug 1987
5.438
Aug 1987
5.763
Aug 1987
6.088
Aug 1987
6.336 6.481 6.760 7.389
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Golden Butterfly 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 | Portfolio is rebalanced each month | Inflation is updated at April 2023

Related Pages

Portfolio Main Page:
Golden Butterfly Portfolio

For the Golden Butterfly Portfolio, we have prepared a report for each available timeframe:
20-Year    30-Year    40-Year    50-Year    60-Year    70-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

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