US Stocks/Bonds 0/100 Portfolio: 5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 5% withdrawal strategy and implemented the US Stocks/Bonds 0/100 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 38.98% of cases, and for 50 years in the 5.37% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.461% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 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.

▼ 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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
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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
72.51
38.98
15.06
5.37
4.61
4.56
3.83
Fail Rate(%)
0.00
27.49
61.02
84.94
94.63
95.39
95.44
96.17
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
99.77
48.26
23.66
11.33
4.49
4.26
3.97
3.38
At least 50%
73.55
35.07
14.92
9.36
3.85
3.81
3.47
1.91
At least 75%
40.45
23.01
10.48
7.16
2.96
3.10
2.98
1.13
At least 100%
23.61
13.00
8.53
5.92
2.16
2.75
2.78
0.23
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1924 - Nov 2024
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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
70.76
34.72
10.40
0.00
0.00
0.00
0.00
Fail Rate(%)
0.00
29.24
65.28
89.60
100.00
100.00
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
99.63
43.08
19.14
9.43
0.00
0.00
0.00
0.00
At least 50%
70.86
29.86
10.58
8.04
0.00
0.00
0.00
0.00
At least 75%
33.77
15.30
8.20
4.99
0.00
0.00
0.00
0.00
At least 100%
16.93
7.49
7.25
3.74
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
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5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
95.85
Fail Rate(%)
0.00
0.00
4.15
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
90.86
66.80
At least 50%
93.35
62.05
36.93
At least 75%
56.76
35.46
28.63
At least 100%
21.83
19.94
25.31
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 November 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 - Nov 2024
Period: Dec 1924 - Nov 2024
Period: Dec 1974 - Nov 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
Jul 1896 		0.000
Jan 1910 		1.908
May 1941 		4.931
May 1941 		7.490
Sep 1915 		8.364 8.728 9.711 10.958
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 4.604 4.823 5.919
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 		2.812 3.058 3.466 4.089
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 		2.068 2.248 2.784 3.271
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 		1.719 1.792 2.377 2.824
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 		1.536 1.617 2.085 2.457
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 		1.435 1.499 1.836 2.162
80 Years
Worst Period (from) 		0.450
May 1901 		0.771
May 1901 		1.050
Jun 1939 		1.151
Jun 1939 		1.252
Feb 1941 		1.357 1.417 1.678 1.991
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
May 1936 		0.000
Jul 1938 		1.908
May 1941 		4.931
May 1941 		7.812
Feb 1946 		8.503 8.798 9.631 10.753
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
80 Years
Worst Period (from) 		0.847
Jun 1939 		0.949
Jun 1939 		1.050
Jun 1939 		1.151
Jun 1939 		1.252
Feb 1941 		1.276 1.294 1.369 1.476
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
Apr 2012 		0.946
Nov 2013 		4.017
Nov 2012 		6.921
Dec 2014 		9.085
Dec 1976 		9.674 10.132 10.775 11.787
20 Years
Worst Period (from) 		0.110
Nov 2003 		1.549
Nov 2003 		2.985
Oct 2003 		4.392
Apr 2004 		5.761
Apr 2004 		5.919 6.079 6.308 7.149
30 Years
Worst Period (from) 		1.685
Nov 1993 		2.514
Nov 1993 		3.342
Nov 1993 		4.171
Nov 1993 		4.809
Dec 1976 		5.017 5.070 5.237 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 November 2024

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:
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