Last Update: 28 February 2023
You decided on a 2% withdrawal strategy and implemented the US Stocks/Bonds 0/100 Portfolio: how likely, so far, your investment would have been enough for your retirement?.
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 2% Withdrawal Strategy
Let's calculate the success rate of a 2% Withdrawal Strategy, on the US Stocks/Bonds 0/100 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.
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):
The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.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The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. 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.
Swipe left to see all data
| 2% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
100.00
|
100.00
|
97.25
|
86.31
|
82.57
|
64.13
|
| Fail Rate(%) |
0.00
|
0.00
|
2.75
|
13.69
|
17.43
|
35.87
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
100.00
|
100.00
|
97.25
|
86.31
|
82.57
|
64.13
|
| At least 25% |
100.00
|
94.68
|
87.01
|
81.91
|
61.88
|
47.11
|
| At least 50% |
86.58
|
77.57
|
78.62
|
57.70
|
48.24
|
41.24
|
| At least 75% |
64.34
|
66.12
|
60.36
|
48.41
|
35.14
|
28.17
|
| At least 100% |
53.18
|
45.67
|
38.68
|
39.28
|
24.48
|
20.97
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 2% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
100.00
|
100.00
|
94.87
|
72.05
|
61.54
|
43.77
|
| Fail Rate(%) |
0.00
|
0.00
|
5.13
|
27.95
|
38.46
|
56.23
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
100.00
|
100.00
|
94.87
|
72.05
|
61.54
|
43.77
|
| At least 25% |
100.00
|
90.73
|
75.73
|
66.22
|
54.68
|
33.80
|
| At least 50% |
81.48
|
68.25
|
66.57
|
56.24
|
43.45
|
28.53
|
| At least 75% |
59.00
|
59.93
|
54.23
|
42.76
|
24.53
|
7.48
|
| At least 100% |
48.91
|
42.21
|
41.47
|
31.11
|
11.85
|
0.28
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 2% Withdrawal Rate |
% Success
|
|
|---|---|---|
| 20 Years | 30 Years | |
| Success Rate (%) |
100.00
|
100.00
|
| Fail Rate(%) |
0.00
|
0.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |
| At least 0% |
100.00
|
100.00
|
| At least 25% |
100.00
|
100.00
|
| At least 50% |
100.00
|
100.00
|
| At least 75% |
98.34
|
100.00
|
| At least 100% |
95.01
|
100.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of US Stocks/Bonds 0/100 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 2023
2% vs Perpetual/Safe Withdrawal Rates
Let's compare a 2% 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.
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|
PWR (%) - Perpetual Withdrawal Rate
|
SWR (%) - Safe Withdrawal Rate
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Preserved Capital | 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 May 1897 |
0.000 Jan 1899 |
0.947 Aug 1939 |
2.376 Aug 1939 |
3.660 Feb 1941 |
4.156 | 4.596 | 4.821 | 5.978 | |
|
30 Years Worst Period (from) |
0.000 May 1890 |
0.000 Jun 1939 |
0.753 May 1940 |
1.637 Nov 1940 |
2.461 Feb 1941 |
2.810 | 3.049 | 3.461 | 4.052 | ||
|
40 Years Worst Period (from) |
0.000 Feb 1933 |
0.000 Nov 1938 |
0.157 Sep 1941 |
1.008 Aug 1941 |
1.834 Feb 1941 |
2.059 | 2.237 | 2.779 | 3.246 | ||
|
50 Years Worst Period (from) |
0.000 Feb 1931 |
0.226 Jun 1934 |
0.748 Jun 1934 |
1.202 Jun 1939 |
1.513 Feb 1941 |
1.717 | 1.791 | 2.368 | 2.813 | ||
|
60 Years Worst Period (from) |
0.629 Oct 1915 |
0.844 Aug 1939 |
1.026 Aug 1939 |
1.207 Aug 1939 |
1.384 Feb 1941 |
1.534 | 1.614 | 2.077 | 2.450 | ||
|
70 Years Worst Period (from) |
0.257 Aug 1911 |
0.654 May 1911 |
1.044 May 1911 |
1.183 Jun 1939 |
1.307 Feb 1941 |
1.433 | 1.498 | 1.831 | 2.141 | ||
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 | 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 Apr 1932 |
0.000 Sep 1938 |
0.947 Aug 1939 |
2.376 Aug 1939 |
3.660 Feb 1941 |
4.025 | 4.245 | 4.739 | 5.625 | |
|
30 Years Worst Period (from) |
0.000 Oct 1932 |
0.000 Jun 1939 |
0.753 May 1940 |
1.637 Nov 1940 |
2.461 Feb 1941 |
2.696 | 2.825 | 3.198 | 3.807 | ||
|
40 Years Worst Period (from) |
0.000 Feb 1933 |
0.000 Nov 1938 |
0.157 Sep 1941 |
1.008 Aug 1941 |
1.834 Feb 1941 |
1.997 | 2.073 | 2.290 | 3.101 | ||
|
50 Years Worst Period (from) |
0.000 Feb 1931 |
0.226 Jun 1934 |
0.748 Jun 1934 |
1.202 Jun 1939 |
1.513 Feb 1941 |
1.595 | 1.716 | 1.791 | 2.675 | ||
|
60 Years Worst Period (from) |
0.663 Aug 1939 |
0.844 Aug 1939 |
1.026 Aug 1939 |
1.207 Aug 1939 |
1.384 Feb 1941 |
1.434 | 1.524 | 1.591 | 2.263 | ||
|
70 Years Worst Period (from) |
0.805 Jun 1939 |
0.931 Jun 1939 |
1.057 Jun 1939 |
1.183 Jun 1939 |
1.307 Feb 1941 |
1.339 | 1.390 | 1.466 | 1.866 | ||
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 | 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) |
0.449 Nov 2002 |
1.820 Mar 2003 |
3.186 Mar 2003 |
4.553 Mar 2003 |
5.281 Mar 1973 |
5.961 | 6.138 | 6.308 | 7.149 | |
|
30 Years Worst Period (from) |
2.065 Mar 1993 |
2.839 Mar 1993 |
3.559 Mar 1973 |
3.925 Mar 1973 |
4.291 Mar 1973 |
4.610 | 4.966 | 5.139 | 5.867 | ||
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of US Stocks/Bonds 0/100 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 2023
Related Pages
Portfolio Main Page:
US Stocks/Bonds 0/100 Portfolio
For the US Stocks/Bonds 0/100 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