Desert Portfolio: 3.5% withdrawal simulation

Last Update: 31 January 2024

You decided on a 3.5% withdrawal strategy and implemented the Gyroscopic Investing Desert 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 100% of cases, and for 50 years in the 65.99% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.565% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 Gyroscopic Investing Desert 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Jan 2024
Swipe left to see all data
3.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
87.11
65.99
56.53
46.29
Fail Rate(%)
0.00
0.00
12.89
34.01
43.47
53.71
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
99.87
90.80
69.81
62.12
50.63
43.89
At least 50%
86.17
73.07
61.34
52.58
44.10
41.88
At least 75%
64.52
52.23
48.09
42.25
39.18
39.68
At least 100%
49.06
42.76
33.51
34.33
34.53
37.78
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Feb 1924 - Jan 2024
Swipe left to see all data
3.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
88.90
74.38
65.70
52.08
Fail Rate(%)
0.00
0.00
11.10
25.62
34.30
47.92
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
93.22
78.50
72.21
59.04
49.86
At least 50%
93.13
84.54
74.20
59.57
49.06
45.98
At least 75%
67.12
58.62
58.25
43.76
38.88
41.27
At least 100%
50.16
44.71
37.17
30.28
28.90
39.06
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Feb 1974 - Jan 2024
Swipe left to see all data
3.5%
Withdrawal Rate
% Success
20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
Fail Rate(%)
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
At least 50%
100.00
100.00
At least 75%
100.00
100.00
At least 100%
95.29
100.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Gyroscopic Investing Desert 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 January 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 - Jan 2024
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 20 Years
Worst Period (from)
0.000
Aug 1898
0.259
Jul 1901
1.826
Jul 1901
3.392
Jul 1901
4.557
Apr 1911
5.062 5.242 5.598 7.121
30 Years
Worst Period (from)
0.674
Jul 1890
1.780
Jul 1890
2.588
May 1901
3.076
May 1901
3.565
May 1901
3.886 4.012 4.277 5.222
40 Years
Worst Period (from)
1.392
Apr 1940
1.840
Apr 1940
2.287
Apr 1940
2.728
Mar 1937
3.126
Feb 1937
3.301 3.422 3.630 4.252
50 Years
Worst Period (from)
1.910
Feb 1899
2.152
Feb 1899
2.353
Feb 1937
2.544
Feb 1937
2.736
Feb 1937
2.951 3.068 3.269 3.851
60 Years
Worst Period (from)
2.091
Feb 1899
2.234
Jan 1899
2.353
Feb 1937
2.462
Feb 1937
2.570
Feb 1937
2.764 2.857 3.028 3.619
70 Years
Worst Period (from)
2.102
Jul 1901
2.211
Jul 1901
2.319
Jul 1901
2.418
Feb 1937
2.485
Feb 1937
2.641 2.715 2.870 3.363
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Feb 1924 - Jan 2024
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 20 Years
Worst Period (from)
0.759
Oct 1961
2.003
Mar 1937
3.002
Mar 1937
4.000
Mar 1937
4.997
Feb 1937
5.300 5.513 5.868 7.137
30 Years
Worst Period (from)
1.379
May 1940
2.001
May 1940
2.622
May 1940
3.231
Jan 1940
3.757
Feb 1937
3.983 4.288 4.486 5.247
40 Years
Worst Period (from)
1.392
Apr 1940
1.840
Apr 1940
2.287
Apr 1940
2.728
Mar 1937
3.126
Feb 1937
3.284 3.431 3.857 4.350
50 Years
Worst Period (from)
1.966
Dec 1936
2.162
Feb 1937
2.353
Feb 1937
2.544
Feb 1937
2.736
Feb 1937
2.897 3.004 3.329 3.914
60 Years
Worst Period (from)
2.135
Mar 1937
2.244
Feb 1937
2.353
Feb 1937
2.462
Feb 1937
2.570
Feb 1937
2.705 2.793 3.043 3.701
70 Years
Worst Period (from)
2.219
Feb 1937
2.285
Feb 1937
2.352
Feb 1937
2.418
Feb 1937
2.485
Feb 1937
2.610 2.658 2.824 3.566
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Feb 1974 - Jan 2024
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 20 Years
Worst Period (from)
3.079
Nov 2003
4.095
Jan 1999
4.946
Feb 1999
5.631
Mar 1974
6.278
Mar 1974
6.915 7.031 7.281 7.923
30 Years
Worst Period (from)
3.930
Nov 1993
4.296
Mar 1974
4.613
Mar 1974
4.930
Mar 1974
5.247
Mar 1974
6.014 6.078 6.223 6.682
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Gyroscopic Investing Desert 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 January 2024

Related Pages

Portfolio Main Page:
Gyroscopic Investing Desert Portfolio

For the Gyroscopic Investing Desert 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