Last Update: 30 September 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 38.9% of cases, and for 50 years in the 5.38% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.461% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
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
|
72.48
|
38.90
|
14.93
|
5.38
|
4.62
|
4.57
|
3.84
|
Fail Rate(%) |
0.00
|
27.52
|
61.10
|
85.07
|
94.62
|
95.38
|
95.43
|
96.16
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
99.77
|
48.32
|
23.69
|
11.20
|
4.49
|
4.26
|
3.98
|
3.39
|
At least 50% |
73.64
|
35.12
|
14.94
|
9.37
|
3.85
|
3.82
|
3.48
|
1.92
|
At least 75% |
40.50
|
23.04
|
10.50
|
7.17
|
2.97
|
3.11
|
2.98
|
1.13
|
At least 100% |
23.64
|
13.01
|
8.55
|
5.93
|
2.17
|
2.75
|
2.78
|
0.23
|
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
|
10.12
|
0.00
|
0.00
|
0.00
|
0.00
|
Fail Rate(%) |
0.00
|
29.24
|
65.28
|
89.88
|
100.00
|
100.00
|
100.00
|
100.00
|
Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
At least 25% |
99.63
|
43.29
|
19.14
|
9.15
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 50% |
71.05
|
30.07
|
10.58
|
8.04
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 75% |
33.95
|
15.30
|
8.20
|
4.99
|
0.00
|
0.00
|
0.00
|
0.00
|
At least 100% |
17.11
|
7.49
|
7.25
|
3.74
|
0.00
|
0.00
|
0.00
|
0.00
|
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
|
91.41
|
66.80
|
At least 50% |
93.76
|
62.05
|
36.93
|
At least 75% |
56.76
|
35.46
|
28.63
|
At least 100% |
21.83
|
19.94
|
25.31
|
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.
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 | 10.959 | |
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 | 5.920 | ||
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 | 4.085 | ||
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 | 3.269 | ||
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 | 2.823 | ||
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 | 2.161 | ||
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 | 1.685 | 1.992 |
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 | 10.760 | |
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 |
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 |
7.074 Nov 2012 |
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 |
5.951 | 6.134 | 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 |
5.006 | 5.056 | 5.178 | 5.867 |
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