Last Update: 31 October 2024
You decided on a 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 5% withdrawal strategy, you would have lived on your investiment for 30 years in the 54.74% of cases, and for 50 years in the 15.72% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.565% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5% Withdrawal Strategy
Let's calculate the success rate of a 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
| 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
|
96.52
|
54.74
|
31.31
|
15.72
|
12.42
|
10.92
|
11.05
|
| Fail Rate(%) |
0.00
|
3.48
|
45.26
|
68.69
|
84.28
|
87.58
|
89.08
|
88.95
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
99.94
|
72.56
|
40.95
|
25.60
|
13.55
|
10.47
|
10.23
|
10.26
|
| At least 50% |
89.98
|
56.25
|
36.52
|
22.46
|
11.15
|
9.41
|
9.63
|
9.81
|
| At least 75% |
63.35
|
36.65
|
29.05
|
19.02
|
8.58
|
8.61
|
8.84
|
9.13
|
| At least 100% |
32.72
|
26.01
|
18.43
|
14.85
|
6.50
|
7.99
|
8.24
|
8.91
|
| 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
|
99.79
|
56.12
|
25.94
|
4.99
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
0.00
|
0.21
|
43.88
|
74.06
|
95.01
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
100.00
|
78.77
|
40.67
|
22.88
|
1.50
|
0.00
|
0.00
|
0.00
|
| At least 50% |
93.80
|
57.23
|
35.08
|
19.97
|
0.33
|
0.00
|
0.00
|
0.00
|
| At least 75% |
65.49
|
33.82
|
28.18
|
14.98
|
0.17
|
0.00
|
0.00
|
0.00
|
| At least 100% |
28.31
|
21.44
|
16.41
|
11.93
|
0.00
|
0.00
|
0.00
|
0.00
|
| 5% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
100.00
|
100.00
|
100.00
|
| Fail Rate(%) |
0.00
|
0.00
|
0.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
100.00
|
100.00
|
100.00
|
| At least 50% |
100.00
|
99.45
|
99.59
|
| At least 75% |
91.68
|
76.18
|
85.48
|
| At least 100% |
42.83
|
48.48
|
56.43
|
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 review a specific timeframe for this portfolio, click on the links in the table.
|
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 1908 |
0.000 Feb 1910 |
1.865 Jul 1911 |
4.988 Jul 1911 |
7.646 Dec 1915 |
9.066 | 9.895 | 10.540 | 12.037 | |
|
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 |
5.065 | 5.243 | 5.603 | 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 |
3.889 | 4.013 | 4.283 | 5.235 | ||
|
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 |
3.306 | 3.424 | 3.630 | 4.255 | ||
|
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 | 3.069 | 3.270 | 3.855 | ||
|
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 |
2.766 | 2.858 | 3.031 | 3.612 | ||
|
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 |
2.644 | 2.715 | 2.874 | 3.396 | ||
|
80 Years Worst Period (from) |
2.043 Jul 1901 |
2.142 Jul 1901 |
2.240 May 1901 |
2.337 May 1901 |
2.431 Feb 1937 |
2.556 | 2.616 | 2.760 | 3.173 | ||
|
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 1936 |
1.442 Jun 1939 |
4.142 Jul 1972 |
6.664 Feb 1946 |
8.611 Feb 1946 |
9.605 | 10.041 | 10.777 | 12.023 | |
|
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 | 7.121 | ||
|
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 | 3.681 | ||
|
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 | ||
|
80 Years Worst Period (from) |
2.252 Feb 1937 |
2.297 Feb 1937 |
2.341 Feb 1937 |
2.386 Feb 1937 |
2.431 Feb 1937 |
2.534 | 2.565 | 2.648 | 3.023 | ||
|
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) |
1.378 Oct 2012 |
3.911 Nov 2013 |
6.421 Nov 2013 |
8.861 Feb 1999 |
10.703 Jan 1977 |
11.262 | 11.443 | 11.739 | 12.464 | |
|
20 Years Worst Period (from) |
3.079 Nov 2003 |
4.095 Jan 1999 |
4.946 Feb 1999 |
5.792 Feb 1999 |
6.639 Feb 1999 |
6.953 | 7.059 | 7.281 | 7.923 | ||
|
30 Years Worst Period (from) |
3.930 Nov 1993 |
4.462 Nov 1993 |
4.994 Nov 1993 |
5.526 Nov 1993 |
5.911 Jun 1975 |
6.056 | 6.135 | 6.250 | 6.682 | ||
Related Pages
Portfolio Main Page:
Gyroscopic Investing Desert Portfolio
For the Gyroscopic Investing Desert 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
