All Weather Portfolio: 7.5% withdrawal simulation

Last Update: 31 October 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.448% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Oct 2024
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7.5%
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
99.94
40.57
12.37
5.49
0.00
0.00
0.00
0.00
Fail Rate(%)
0.06
59.43
87.63
94.51
100.00
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
87.96
27.88
10.42
3.37
0.00
0.00
0.00
0.00
At least 50%
57.04
17.05
7.73
2.19
0.00
0.00
0.00
0.00
At least 75%
30.57
10.39
4.91
1.83
0.00
0.00
0.00
0.00
At least 100%
13.20
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: Nov 1924 - Oct 2024
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7.5%
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
39.85
9.16
5.83
0.00
0.00
0.00
0.00
Fail Rate(%)
0.00
60.15
90.84
94.17
100.00
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
90.75
25.49
7.97
4.99
0.00
0.00
0.00
0.00
At least 50%
56.98
13.11
6.90
4.16
0.00
0.00
0.00
0.00
At least 75%
28.95
7.18
5.59
3.47
0.00
0.00
0.00
0.00
At least 100%
9.53
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: Nov 1974 - Oct 2024
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7.5%
Withdrawal Rate
% Success
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 October 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 - Oct 2024
Period: Nov 1924 - Oct 2024
Period: Nov 1974 - Oct 2024
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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 7.063
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 5.051
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 4.085
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 3.264
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
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 12.067
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 3.536
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
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
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 		7.231 7.332 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 6.271 6.686 7.151
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 2024

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