Permanent Portfolio: 5% withdrawal simulation

Last Update: 30 November 2023

You decided on a 5% withdrawal strategy and implemented the Harry Browne Permanent 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 50.41% of cases, and for 50 years in the 9.79% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.304% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 Harry Browne Permanent 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Nov 2023
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5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
88.97
50.41
26.47
9.79
7.97
6.83
Fail Rate(%)
11.03
49.59
73.53
90.21
92.03
93.17
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
71.87
36.99
18.14
8.58
6.81
5.82
At least 50%
50.75
28.12
10.69
5.99
5.91
5.02
At least 75%
32.46
13.55
8.48
4.05
4.57
4.02
At least 100%
15.29
8.74
7.01
2.10
3.85
3.51
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1923 - Nov 2023
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5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
92.61
51.49
21.08
1.50
0.00
0.00
Fail Rate(%)
7.39
48.51
78.92
98.50
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
79.19
35.20
14.01
1.00
0.00
0.00
At least 50%
50.78
22.71
4.58
0.17
0.00
0.00
At least 75%
28.20
6.78
2.22
0.00
0.00
0.00
At least 100%
5.41
2.85
1.53
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1973 - Nov 2023
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5%
Withdrawal Rate
% Success
20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
99.17
Fail Rate(%)
0.00
0.83
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
87.14
At least 50%
96.12
57.26
At least 75%
56.51
20.75
At least 100%
5.26
9.96
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Harry Browne Permanent 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 October 2023

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.

Period: Jan 1871 - Nov 2023
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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 20 Years
Worst Period (from) 		0.000
Feb 1898 		0.014
Jul 1900 		1.728
Jul 1901 		3.301
Jul 1901 		4.392
Jun 1911 		4.774 4.958 5.385 6.872
30 Years
Worst Period (from) 		0.327
Jul 1890 		1.184
May 1940 		1.910
May 1940 		2.637
May 1940 		3.304
Feb 1937 		3.538 3.705 3.929 5.012
40 Years
Worst Period (from) 		0.976
Sep 1936 		1.420
Nov 1936 		1.845
Feb 1937 		2.262
Feb 1937 		2.679
Feb 1937 		2.957 3.126 3.309 4.131
50 Years
Worst Period (from) 		1.526
Feb 1936 		1.737
Dec 1936 		1.945
Dec 1936 		2.152
Feb 1937 		2.354
Feb 1937 		2.614 2.762 2.917 3.668
60 Years
Worst Period (from) 		1.635
Feb 1937 		1.775
Feb 1937 		1.914
Feb 1937 		2.054
Feb 1937 		2.193
Feb 1937 		2.397 2.526 2.662 3.340
70 Years
Worst Period (from) 		1.632
Jul 1901 		1.793
Jul 1901 		1.922
Feb 1937 		2.008
Feb 1937 		2.094
Feb 1937 		2.267 2.370 2.479 3.042
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Dec 1923 - Nov 2023
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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 20 Years
Worst Period (from) 		0.042
Jul 1933 		1.239
Mar 1937 		2.367
Mar 1937 		3.495
Mar 1937 		4.590
Jan 1940 		4.832 5.255 5.959 6.785
30 Years
Worst Period (from) 		0.458
May 1940 		1.184
May 1940 		1.910
May 1940 		2.637
May 1940 		3.304
Feb 1937 		3.482 3.713 4.291 5.032
40 Years
Worst Period (from) 		0.976
Sep 1936 		1.420
Nov 1936 		1.845
Feb 1937 		2.262
Feb 1937 		2.679
Feb 1937 		2.811 2.980 3.251 4.170
50 Years
Worst Period (from) 		1.526
Feb 1936 		1.737
Dec 1936 		1.945
Dec 1936 		2.152
Feb 1937 		2.354
Feb 1937 		2.474 2.604 2.848 3.746
60 Years
Worst Period (from) 		1.635
Feb 1937 		1.775
Feb 1937 		1.914
Feb 1937 		2.054
Feb 1937 		2.193
Feb 1937 		2.303 2.367 2.559 3.392
70 Years
Worst Period (from) 		1.749
Feb 1937 		1.835
Feb 1937 		1.922
Feb 1937 		2.008
Feb 1937 		2.094
Feb 1937 		2.194 2.237 2.370 3.072
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Dec 1973 - Nov 2023
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) 		3.028
Apr 1974 		3.817
Apr 1974 		4.605
Apr 1974 		5.389
Mar 1974 		6.168
Mar 1974 		6.666 6.837 7.014 7.394
30 Years
Worst Period (from) 		3.198
Mar 1974 		3.624
Mar 1974 		4.049
Mar 1974 		4.475
Mar 1974 		4.900
Mar 1974 		5.228 5.375 5.488 5.895
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Harry Browne Permanent 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 October 2023

Related Pages

Portfolio Main Page:
Harry Browne Permanent Portfolio

For the Harry Browne Permanent 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