All Weather Portfolio: 7.5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 7.5% 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 7.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 12.37% of cases, and for 50 years in the 0% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.448% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 7.5% Withdrawal Strategy

Let's calculate the success rate of a 7.5% 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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.

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.

Period: Jan 1871 - Nov 2024

Swipe left to see all data

7.5% Withdrawal Rate	% Success
7.5% Withdrawal Rate	10 Years	20 Years	30 Years	40 Years	50 Years	60 Years	70 Years	80 Years
Success Rate (%) At least 0% Preserved Capital	99.94	40.55	12.37	5.56	0.00	0.00	0.00	0.00
Fail Rate(%)	0.06	59.45	87.63	94.44	100.00	100.00	100.00	100.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	87.96	27.86	10.42	3.44	0.00	0.00	0.00	0.00
At least 50%	57.00	17.04	7.73	2.27	0.00	0.00	0.00	0.00
At least 75%	30.56	10.39	4.91	1.83	0.00	0.00	0.00	0.00
At least 100%	13.19	7.34	2.49	1.39	0.00	0.00	0.00	0.00

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1924 - Nov 2024

Swipe left to see all data

7.5% Withdrawal Rate	% Success
7.5% Withdrawal Rate	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	39.75	9.16	5.96	0.00	0.00	0.00	0.00
Fail Rate(%)	0.00	60.25	90.84	94.04	100.00	100.00	100.00	100.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	90.75	25.39	7.97	5.13	0.00	0.00	0.00	0.00
At least 50%	56.89	13.01	6.90	4.30	0.00	0.00	0.00	0.00
At least 75%	28.86	7.18	5.59	3.47	0.00	0.00	0.00	0.00
At least 100%	9.44	5.41	4.16	2.64	0.00	0.00	0.00	0.00

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1974 - Nov 2024

Swipe left to see all data

7.5% Withdrawal Rate	% Success
7.5% Withdrawal Rate	10 Years	20 Years	30 Years
Success Rate (%) At least 0% Preserved Capital	100.00	81.99	31.95
Fail Rate(%)	0.00	18.01	68.05
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	56.23	27.80
At least 50%	88.77	28.81	24.07
At least 75%	47.82	19.11	19.50
At least 100%	14.55	14.40	14.52

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 November 2024

7.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 7.5% 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 2024

Period: Dec 1924 - Nov 2024

Period: Dec 1974 - Nov 2024

Table Chart

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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	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

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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	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

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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	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

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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

Success Rate of a 7.5% Withdrawal Strategy

7.5% vs Perpetual/Safe Withdrawal Rates

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