US Stocks/Bonds 10/90 Portfolio: 2.5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 2.5% withdrawal strategy and implemented the US Stocks/Bonds 10/90 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 2.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 100% of cases, and for 50 years in the 86.69% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.929% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 2.5% Withdrawal Strategy

Let's calculate the success rate of a 2.5% Withdrawal Strategy, on the US Stocks/Bonds 10/90 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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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2.5%
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
100.00
100.00
95.54
86.69
78.44
55.01
48.48
Fail Rate(%)
0.00
0.00
0.00
4.46
13.31
21.56
44.99
51.52
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
96.23
87.71
78.99
59.45
47.96
46.11
At least 50%
99.19
90.17
78.95
77.32
59.42
51.02
43.00
42.28
At least 75%
78.92
64.78
62.27
56.47
50.68
37.62
33.37
35.85
At least 100%
50.78
49.22
44.18
36.06
35.20
23.16
28.00
32.47
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Nov 1924 - Oct 2024
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2.5%
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
100.00
100.00
91.54
72.38
62.37
42.94
30.29
Fail Rate(%)
0.00
0.00
0.00
8.46
27.62
37.63
57.06
69.71
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
93.34
76.70
67.39
56.34
35.18
27.80
At least 50%
100.00
88.14
71.46
69.90
60.23
47.19
27.42
26.56
At least 75%
77.06
60.25
53.98
56.59
45.76
22.66
13.30
16.18
At least 100%
48.20
43.60
41.38
33.98
17.97
4.78
7.76
13.28
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Nov 1974 - Oct 2024
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2.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
100.00
100.00
Fail Rate(%)
0.00
0.00
0.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
100.00
At least 50%
100.00
100.00
100.00
At least 75%
96.88
96.95
100.00
At least 100%
84.82
88.64
99.17
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 10/90 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

2.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 2.5% 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
Jun 1897 		0.000
Feb 1910 		2.054
May 1911 		5.155
May 1911 		7.618
Mar 1916 		8.563 9.105 10.037 11.291
20 Years
Worst Period (from) 		0.000
Jul 1897 		0.000
Jun 1900 		1.689
Jul 1900 		3.002
Aug 1939 		4.145
Jan 1941 		4.690 4.820 5.067 6.278
30 Years
Worst Period (from) 		0.000
Jan 1940 		0.620
May 1940 		1.413
May 1940 		2.190
Nov 1940 		2.929
Jan 1941 		3.306 3.452 3.756 4.299
40 Years
Worst Period (from) 		0.000
Nov 1938 		0.071
Sep 1941 		0.823
Sep 1941 		1.553
Aug 1941 		2.255
Jan 1941 		2.528 2.768 3.158 3.517
50 Years
Worst Period (from) 		0.473
Jun 1934 		0.921
Jun 1934 		1.353
Jun 1939 		1.636
Jun 1939 		1.903
Jan 1941 		2.118 2.239 2.766 3.084
60 Years
Worst Period (from) 		1.175
Aug 1939 		1.321
Aug 1939 		1.466
Aug 1939 		1.612
Aug 1939 		1.758
Aug 1939 		1.923 2.052 2.471 2.833
70 Years
Worst Period (from) 		1.026
May 1911 		1.312
May 1911 		1.462
Aug 1939 		1.568
Aug 1939 		1.674
Aug 1939 		1.807 1.930 2.231 2.578
80 Years
Worst Period (from) 		1.140
May 1901 		1.366
May 1901 		1.461
Aug 1939 		1.538
Aug 1939 		1.616
Aug 1939 		1.730 1.859 2.070 2.424
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
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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
Sep 1936 		0.000
Jun 1941 		2.504
Oct 1971 		5.641
Aug 1941 		8.103
Feb 1946 		8.797 9.227 9.936 11.190
20 Years
Worst Period (from) 		0.000
May 1933 		0.315
Oct 1961 		1.768
Aug 1939 		3.002
Aug 1939 		4.145
Jan 1941 		4.503 4.735 4.985 6.090
30 Years
Worst Period (from) 		0.000
Jan 1940 		0.620
May 1940 		1.413
May 1940 		2.190
Nov 1940 		2.929
Jan 1941 		3.138 3.330 3.680 4.143
40 Years
Worst Period (from) 		0.000
Nov 1938 		0.071
Sep 1941 		0.823
Sep 1941 		1.553
Aug 1941 		2.255
Jan 1941 		2.397 2.537 2.797 3.380
50 Years
Worst Period (from) 		0.473
Jun 1934 		0.921
Jun 1934 		1.353
Jun 1939 		1.636
Jun 1939 		1.903
Jan 1941 		1.988 2.112 2.233 3.025
60 Years
Worst Period (from) 		1.175
Aug 1939 		1.321
Aug 1939 		1.466
Aug 1939 		1.612
Aug 1939 		1.758
Aug 1939 		1.817 1.900 2.027 2.745
70 Years
Worst Period (from) 		1.250
Aug 1939 		1.356
Aug 1939 		1.462
Aug 1939 		1.568
Aug 1939 		1.674
Aug 1939 		1.721 1.774 1.878 2.376
80 Years
Worst Period (from) 		1.306
Aug 1939 		1.384
Aug 1939 		1.461
Aug 1939 		1.538
Aug 1939 		1.616
Aug 1939 		1.652 1.671 1.740 1.918
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
Jul 2012 		1.927
Nov 2013 		4.873
Nov 2013 		7.685
Nov 2014 		9.393
Dec 1976 		10.024 10.698 11.099 11.839
20 Years
Worst Period (from) 		0.933
Nov 2003 		2.238
Nov 2003 		3.543
Nov 2003 		4.810
Apr 2004 		6.035
Apr 2004 		6.264 6.378 6.499 7.449
30 Years
Worst Period (from) 		2.418
Nov 1993 		3.153
Nov 1993 		3.888
Nov 1993 		4.623
Nov 1993 		5.123
Dec 1976 		5.323 5.395 5.585 6.177
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 10/90 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:
US Stocks/Bonds 10/90 Portfolio

For the US Stocks/Bonds 10/90 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