Last Update: 31 October 2024
You decided on a 6.5% withdrawal strategy and implemented the Harry Browne Permanent Portfolio: how likely, so far, your investment would have been enough for your retirement?.
With a 6.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 13.72% of cases, and for 50 years in the 0.4% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.304% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 6.5% Withdrawal Strategy
Let's calculate the success rate of a 6.5% 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
6.5% 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
|
55.57
|
13.72
|
5.27
|
0.40
|
0.00
|
0.00
|
0.00
|
Fail Rate(%) |
0.00
|
44.43
|
86.28
|
94.73
|
99.60
|
100.00
|
100.00
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
93.98
|
36.28
|
7.73
|
3.29
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 50% |
70.12
|
16.86
|
5.99
|
1.76
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 75% |
34.68
|
8.46
|
3.63
|
0.29
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 100% |
11.46
|
5.60
|
1.88
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
6.5% 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
|
55.67
|
3.45
|
0.14
|
0.00
|
0.00
|
0.00
|
0.00
|
Fail Rate(%) |
0.00
|
44.33
|
96.55
|
99.86
|
100.00
|
100.00
|
100.00
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
97.96
|
32.26
|
0.83
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 50% |
73.36
|
6.24
|
0.48
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 75% |
28.58
|
0.42
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 100% |
4.81
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
6.5% Withdrawal Rate |
% Success
|
||
---|---|---|---|
10 Years | 20 Years | 30 Years | |
Success Rate (%) At least 0% Preserved Capital |
100.00
|
98.34
|
11.20
|
Fail Rate(%) |
0.00
|
1.66
|
88.80
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
At least 25% |
100.00
|
62.88
|
2.90
|
At least 50% |
97.71
|
8.59
|
1.66
|
At least 75% |
41.37
|
1.11
|
0.00
|
At least 100% |
2.29
|
0.00
|
0.00
|
6.5% vs Perpetual/Safe Withdrawal Rates
Let's compare a 6.5% 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 Oct 1907 |
0.000 Dec 1908 |
1.801 Dec 1910 |
4.932 Jul 1911 |
7.639 Dec 1915 |
8.867 | 9.821 | 10.619 | 11.703 | |
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 |
4.779 | 4.959 | 5.388 | 6.885 | ||
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 |
3.546 | 3.706 | 3.929 | 5.025 | ||
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 |
2.967 | 3.128 | 3.319 | 4.134 | ||
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 |
2.617 | 2.764 | 2.919 | 3.677 | ||
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 |
2.417 | 2.527 | 2.665 | 3.352 | ||
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 |
2.272 | 2.370 | 2.481 | 3.053 | ||
80 Years Worst Period (from) |
1.738 Jan 1899 |
1.846 Jul 1901 |
1.924 Feb 1937 |
1.981 Feb 1937 |
2.038 Feb 1937 |
2.189 | 2.256 | 2.361 | 2.820 |
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 Sep 1936 |
0.864 Mar 1939 |
3.679 Jun 1939 |
6.258 Feb 1946 |
8.368 Feb 1946 |
9.475 | 10.036 | 10.760 | 11.618 | |
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 | ||
80 Years Worst Period (from) |
1.811 Feb 1937 |
1.868 Feb 1937 |
1.924 Feb 1937 |
1.981 Feb 1937 |
2.038 Feb 1937 |
2.119 | 2.145 | 2.208 | 2.570 |
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) |
0.720 Oct 2012 |
3.268 Oct 2012 |
5.817 Oct 2012 |
8.365 Oct 2012 |
10.788 Aug 1987 |
11.136 | 11.318 | 11.559 | 12.248 | |
20 Years Worst Period (from) |
3.181 Aug 1987 |
3.986 Aug 1987 |
4.790 Aug 1987 |
5.595 Aug 1987 |
6.399 Aug 1987 |
6.761 | 6.874 | 7.078 | 7.430 | ||
30 Years Worst Period (from) |
3.455 Aug 1987 |
3.871 Aug 1987 |
4.286 Aug 1987 |
4.701 Aug 1987 |
5.117 Aug 1987 |
5.322 | 5.422 | 5.538 | 5.930 |
Related Pages
Portfolio Main Page:
Harry Browne Permanent Portfolio
For the Harry Browne Permanent 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