Last Update: 28 February 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?.
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.
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):
The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.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The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. 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.
Swipe left to see all data
| 5% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
88.91
|
50.10
|
25.98
|
9.86
|
8.04
|
6.89
|
| Fail Rate(%) |
11.09
|
49.90
|
74.02
|
90.14
|
91.96
|
93.11
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
88.91
|
50.10
|
25.98
|
9.86
|
8.04
|
6.89
|
| At least 25% |
71.71
|
36.61
|
17.82
|
8.64
|
6.87
|
5.88
|
| At least 50% |
50.47
|
28.29
|
10.76
|
6.03
|
5.96
|
5.07
|
| At least 75% |
32.26
|
13.63
|
8.54
|
4.07
|
4.61
|
4.05
|
| At least 100% |
15.37
|
8.79
|
7.05
|
2.12
|
3.88
|
3.55
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 5% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
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 0% |
92.61
|
51.49
|
21.08
|
1.50
|
0.00
|
0.00
|
| At least 25% |
79.19
|
35.20
|
14.01
|
1.00
|
0.00
|
0.00
|
| At least 50% |
50.78
|
23.78
|
4.58
|
0.17
|
0.00
|
0.00
|
| At least 75% |
28.51
|
6.78
|
2.22
|
0.00
|
0.00
|
0.00
|
| At least 100% |
6.35
|
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%
Swipe left to see all data
| 5% Withdrawal Rate |
% Success
|
|
|---|---|---|
| 20 Years | 30 Years | |
| Success Rate (%) |
100.00
|
97.93
|
| Fail Rate(%) |
0.00
|
2.07
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |
| At least 0% |
100.00
|
97.93
|
| At least 25% |
100.00
|
83.40
|
| At least 50% |
93.91
|
57.26
|
| At least 75% |
54.85
|
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 January 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.
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) |
0.000 Feb 1898 |
0.014 Jul 1900 |
1.728 Jul 1901 |
3.301 Jul 1901 |
4.392 Jun 1911 |
4.774 | 4.957 | 5.379 | 6.841 | |
|
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 | 3.703 | 3.926 | 5.003 | ||
|
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 | 3.125 | 3.308 | 4.127 | ||
|
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 | 2.761 | 2.917 | 3.654 | ||
|
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 | 2.521 | 2.660 | 3.329 | ||
|
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 | 2.369 | 2.474 | 3.012 | ||
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
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) |
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%
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) |
3.028 Apr 1974 |
3.816 Jul 1973 |
4.581 Jul 1973 |
5.345 Jul 1973 |
6.109 Jul 1973 |
6.515 | 6.778 | 6.977 | 7.351 | |
|
30 Years Worst Period (from) |
3.089 Jul 1973 |
3.530 Jul 1973 |
3.971 Jul 1973 |
4.413 Jul 1973 |
4.854 Jul 1973 |
5.149 | 5.270 | 5.466 | 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 January 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