Last Update: 30 November 2024
You decided on a 7% 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 7% withdrawal strategy, you would have lived on your investiment for 30 years in the 20.23% of cases, and for 50 years in the 0.48% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.448% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 7% Withdrawal Strategy
Let's calculate the success rate of a 7% 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
| 7% 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
|
51.68
|
20.23
|
9.65
|
0.48
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
0.00
|
48.32
|
79.77
|
90.35
|
99.52
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
93.29
|
34.95
|
13.37
|
7.97
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 50% |
63.43
|
24.19
|
11.02
|
5.48
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 75% |
37.33
|
13.68
|
8.60
|
3.65
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 100% |
16.20
|
9.58
|
6.18
|
2.41
|
0.00
|
0.00
|
0.00
|
0.00
|
| 7% 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
|
51.30
|
18.07
|
7.91
|
0.00
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
0.00
|
48.70
|
81.93
|
92.09
|
100.00
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
98.61
|
33.09
|
11.18
|
7.35
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 50% |
64.85
|
21.33
|
8.44
|
6.24
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 75% |
35.89
|
9.47
|
7.61
|
5.55
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 100% |
13.23
|
6.87
|
6.66
|
4.58
|
0.00
|
0.00
|
0.00
|
0.00
|
| 7% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
100.00
|
99.45
|
62.24
|
| Fail Rate(%) |
0.00
|
0.55
|
37.76
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
100.00
|
74.52
|
39.00
|
| At least 50% |
93.14
|
49.03
|
29.46
|
| At least 75% |
60.08
|
24.65
|
26.56
|
| At least 100% |
20.79
|
18.28
|
23.24
|
7% vs Perpetual/Safe Withdrawal Rates
Let's compare a 7% 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 1909 |
1.601 Jul 1911 |
4.829 Jul 1911 |
7.495 Feb 1916 |
8.990 | 9.864 | 10.436 | 12.081 | |
|
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 | 5.481 | 7.065 | ||
|
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 |
3.795 | 3.939 | 4.175 | 5.052 | ||
|
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 |
3.193 | 3.313 | 3.533 | 4.087 | ||
|
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 |
2.836 | 2.952 | 3.161 | 3.712 | ||
|
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 |
2.654 | 2.750 | 2.946 | 3.491 | ||
|
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 | 2.605 | 2.767 | 3.265 | ||
|
80 Years Worst Period (from) |
1.844 Jul 1901 |
1.963 Jul 1901 |
2.081 Jul 1901 |
2.197 May 1901 |
2.313 May 1901 |
2.458 | 2.519 | 2.647 | 3.052 | ||
|
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 Dec 1936 |
1.017 Jul 1972 |
3.885 Jul 1972 |
6.529 Feb 1946 |
8.501 Feb 1946 |
9.661 | 9.965 | 10.570 | 12.064 | |
|
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 | 3.531 | ||
|
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 | 3.384 | ||
|
80 Years Worst Period (from) |
2.191 Feb 1937 |
2.229 Feb 1937 |
2.267 Feb 1937 |
2.305 Feb 1937 |
2.343 Feb 1937 |
2.462 | 2.491 | 2.568 | 2.940 | ||
|
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) |
1.035 Nov 2013 |
3.758 Nov 2013 |
6.466 Oct 2012 |
8.498 Jul 1975 |
10.257 Jan 1977 |
10.858 | 11.551 | 11.967 | 12.851 | |
|
20 Years Worst Period (from) |
3.460 Nov 2003 |
4.466 Apr 2004 |
5.416 Apr 2004 |
6.367 Apr 2004 |
6.995 Jul 1975 |
7.247 | 7.350 | 7.555 | 8.332 | ||
|
30 Years Worst Period (from) |
4.425 Nov 1993 |
4.950 Nov 1993 |
5.444 Jul 1975 |
5.714 Jul 1975 |
5.985 Jul 1975 |
6.140 | 6.297 | 6.699 | 7.152 | ||
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:
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
