All Weather Portfolio: 4.5% withdrawal simulation

Last Update: 30 November 2023

You decided on a 4.5% withdrawal strategy and implemented the Ray Dalio All Weather Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 4.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 63.89% of cases, and for 50 years in the 24.03% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.448% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 4.5% Withdrawal Strategy

Let's calculate the success rate of a 4.5% Withdrawal Strategy, on the Ray Dalio All Weather 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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
Swipe left to see all data
4.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
63.89
39.16
24.03
17.74
16.47
Fail Rate(%)
0.00
36.11
60.84
75.97
82.26
83.53
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
80.45
48.44
33.11
19.34
14.96
15.46
At least 50%
59.96
41.94
27.14
16.10
12.90
13.76
At least 75%
46.62
37.20
23.53
13.75
10.93
12.55
At least 100%
38.28
31.44
21.31
11.00
9.95
11.85
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1923 - Nov 2023
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4.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
69.44
38.83
14.31
6.86
3.88
Fail Rate(%)
0.00
30.56
61.17
85.69
93.14
96.12
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
87.30
49.82
31.07
10.82
3.33
2.49
At least 50%
62.12
43.64
27.32
7.65
1.25
1.94
At least 75%
47.45
37.46
23.16
3.66
0.21
0.55
At least 100%
38.09
33.29
19.97
1.83
0.00
0.28
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1973 - Nov 2023
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4.5%
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%
99.45
99.17
At least 100%
86.98
97.51
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Ray Dalio All Weather 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

4.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 4.5% 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
Aug 1898
0.000
Jul 1900
1.546
Jul 1901
3.189
Jul 1901
4.502
Apr 1911
4.999 5.143 5.474 7.053
30 Years
Worst Period (from)
0.365
Jul 1890
1.516
Jul 1890
2.393
Feb 1946
2.939
May 1901
3.448
May 1901
3.790 3.937 4.172 5.039
40 Years
Worst Period (from)
1.022
Oct 1941
1.579
Apr 1940
2.086
Apr 1940
2.593
Apr 1940
2.932
Feb 1946
3.191 3.311 3.530 4.070
50 Years
Worst Period (from)
1.817
Jul 1901
2.026
Feb 1937
2.224
Feb 1937
2.423
Feb 1937
2.621
Feb 1937
2.826 2.950 3.160 3.707
60 Years
Worst Period (from)
1.972
Jul 1901
2.117
Jul 1901
2.258
Feb 1937
2.361
Feb 1937
2.464
Feb 1937
2.650 2.743 2.942 3.492
70 Years
Worst Period (from)
1.916
Jul 1901
2.043
Jul 1901
2.169
Jul 1901
2.296
Jul 1901
2.388
Feb 1937
2.544 2.604 2.767 3.250
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)
0.000
Oct 1961
1.400
Oct 1961
2.812
Oct 1961
4.008
Mar 1937
4.932
Feb 1946
5.221 5.395 5.767 7.061
30 Years
Worst Period (from)
1.000
May 1940
1.706
May 1940
2.393
Feb 1946
3.011
Feb 1946
3.629
Feb 1946
3.929 4.132 4.306 5.039
40 Years
Worst Period (from)
1.022
Oct 1941
1.579
Apr 1940
2.086
Apr 1940
2.593
Apr 1940
2.932
Feb 1946
3.178 3.294 3.706 4.117
50 Years
Worst Period (from)
1.823
Dec 1936
2.026
Feb 1937
2.224
Feb 1937
2.423
Feb 1937
2.621
Feb 1937
2.773 2.857 3.182 3.741
60 Years
Worst Period (from)
2.052
Mar 1937
2.156
Feb 1937
2.258
Feb 1937
2.361
Feb 1937
2.464
Feb 1937
2.616 2.669 2.944 3.551
70 Years
Worst Period (from)
2.154
Feb 1937
2.212
Feb 1937
2.271
Feb 1937
2.330
Feb 1937
2.388
Feb 1937
2.526 2.564 2.707 3.390
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)
3.460
Nov 2003
4.432
Mar 1974
5.023
Mar 1974
5.615
Mar 1974
6.206
Feb 1974
7.128 7.309 7.508 8.332
30 Years
Worst Period (from)
4.189
Feb 1974
4.463
Feb 1974
4.737
Feb 1974
5.011
Feb 1974
5.285
Feb 1974
6.042 6.172 6.550 7.121
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Ray Dalio All Weather 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:
Ray Dalio All Weather Portfolio

For the Ray Dalio All Weather 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