Short Term Treasury Portfolio: 5% withdrawal simulation

Last Update: 31 January 2024

You decided on a 5% withdrawal strategy and implemented the Short Term Treasury Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 5% withdrawal strategy, you would have lived on your investiment for 30 years in the 31.94% of cases, and for 50 years in the 9.69% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.339% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5% Withdrawal Strategy

Let's calculate the success rate of a 5% Withdrawal Strategy, on the Short Term Treasury 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Jan 2024
Swipe left to see all data
5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
82.79
31.94
15.39
9.69
8.41
7.11
Fail Rate(%)
17.21
68.06
84.61
90.31
91.59
92.89
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
44.56
21.24
11.56
8.48
6.62
6.41
At least 50%
30.85
14.61
8.03
6.62
6.35
5.81
At least 75%
19.34
11.37
6.04
5.49
5.99
5.61
At least 100%
13.27
8.46
5.60
4.60
5.46
5.11
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Feb 1924 - Jan 2024
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5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
At least 0% Preserved Capital
78.56
18.31
5.13
0.00
0.00
0.00
Fail Rate(%)
21.44
81.69
94.87
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
36.21
9.39
2.08
0.00
0.00
0.00
At least 50%
16.65
4.52
0.00
0.00
0.00
0.00
At least 75%
7.39
2.38
0.00
0.00
0.00
0.00
At least 100%
2.91
0.12
0.00
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Feb 1974 - Jan 2024
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5%
Withdrawal Rate
% Success
20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
95.29
63.90
Fail Rate(%)
4.71
36.10
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
75.62
32.78
At least 50%
36.01
15.77
At least 75%
19.67
8.30
At least 100%
7.76
0.41
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Short Term Treasury 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 | Inflation is updated at January 2024

5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 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 - Jan 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 20 Years
Worst Period (from)
0.000
Sep 1898
0.000
Apr 1932
0.618
Jul 1933
2.102
Aug 1939
3.462
Feb 1941
3.979 4.147 5.127 5.854
30 Years
Worst Period (from)
0.000
Dec 1930
0.000
Mar 1933
0.804
Jun 1933
1.573
Jun 1939
2.339
Jun 1939
2.560 2.817 3.756 4.181
40 Years
Worst Period (from)
0.000
Aug 1931
0.000
Apr 1939
0.466
Apr 1940
1.147
Dec 1940
1.793
Jun 1939
1.947 2.143 2.929 3.424
50 Years
Worst Period (from)
0.000
Dec 1930
0.203
Jun 1933
0.644
Jun 1933
1.085
Jun 1933
1.485
Jun 1939
1.569 1.781 2.388 2.919
60 Years
Worst Period (from)
0.444
Jun 1933
0.670
Jun 1933
0.896
Jun 1933
1.122
Jun 1933
1.347
Jun 1939
1.409 1.499 2.024 2.474
70 Years
Worst Period (from)
0.345
May 1911
0.691
May 1911
0.951
Jun 1933
1.100
Jun 1933
1.250
Jun 1933
1.313 1.367 1.731 2.172
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Feb 1924 - Jan 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 20 Years
Worst Period (from)
0.000
Aug 1930
0.000
Apr 1932
0.618
Jul 1933
2.102
Aug 1939
3.462
Feb 1941
3.814 4.004 4.935 5.708
30 Years
Worst Period (from)
0.000
Dec 1930
0.000
Mar 1933
0.804
Jun 1933
1.573
Jun 1939
2.339
Jun 1939
2.504 2.568 2.915 4.029
40 Years
Worst Period (from)
0.000
Aug 1931
0.000
Apr 1939
0.466
Apr 1940
1.147
Dec 1940
1.793
Jun 1939
1.903 1.951 2.156 3.332
50 Years
Worst Period (from)
0.000
Dec 1930
0.203
Jun 1933
0.644
Jun 1933
1.085
Jun 1933
1.485
Jun 1939
1.549 1.569 1.757 2.821
60 Years
Worst Period (from)
0.444
Jun 1933
0.670
Jun 1933
0.896
Jun 1933
1.122
Jun 1933
1.347
Jun 1939
1.392 1.405 1.448 2.248
70 Years
Worst Period (from)
0.653
Jun 1933
0.802
Jun 1933
0.951
Jun 1933
1.100
Jun 1933
1.250
Jun 1933
1.280 1.307 1.324 1.659
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Feb 1974 - Jan 2024
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)
0.000
Nov 2001
0.419
Jul 2003
1.919
Jul 2003
3.419
Jan 2004
4.879
Jan 2004
5.079 5.526 5.929 6.546
30 Years
Worst Period (from)
0.488
Oct 1993
1.431
Oct 1993
2.375
Oct 1993
3.318
Oct 1993
4.248
Feb 1994
4.349 4.552 4.884 5.097
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Short Term Treasury 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 | Inflation is updated at January 2024

Related Pages

Portfolio Main Page:
Short Term Treasury Portfolio

For the Short Term Treasury 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