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

Last Update: 31 October 2024

You decided on a 5% withdrawal strategy and implemented the US Stocks/Bonds 100/0 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 83.73% of cases, and for 50 years in the 69.93% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 2.895% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 100/0 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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

Swipe left to see all data

5% Withdrawal Rate	% Success
5% Withdrawal Rate	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	96.27	83.73	75.35	69.93	73.20	73.68	69.33
Fail Rate(%)	0.00	3.73	16.27	24.65	30.07	26.80	26.32	30.67
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	99.19	86.68	78.88	73.66	68.16	72.58	73.19	69.11
At least 50%	87.20	78.66	76.06	70.89	66.32	71.78	72.99	69.00
At least 75%	78.17	69.82	71.69	67.89	64.55	71.07	72.49	68.77
At least 100%	66.13	65.53	66.04	65.62	62.39	68.94	72.00	68.09

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Nov 1924 - Oct 2024

Swipe left to see all data

5% Withdrawal Rate	% Success
5% Withdrawal Rate	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	93.96	83.83	75.73	67.55	78.79	83.93	75.93
Fail Rate(%)	0.00	6.04	16.17	24.27	32.45	21.21	16.07	24.07
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	98.89	84.91	80.02	74.06	66.22	78.38	83.93	75.93
At least 50%	85.48	77.11	78.12	72.54	64.89	78.17	83.93	75.93
At least 75%	77.52	70.55	75.03	71.29	63.56	77.96	83.93	75.93
At least 100%	67.44	65.87	72.41	70.32	62.23	77.13	83.93	75.93

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Nov 1974 - Oct 2024

Swipe left to see all data

5% Withdrawal Rate	% Success
5% Withdrawal Rate	10 Years	20 Years	30 Years
Success Rate (%) At least 0% Preserved Capital	100.00	98.34	100.00
Fail Rate(%)	0.00	1.66	0.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	99.79	93.91	100.00
At least 50%	94.18	90.86	100.00
At least 75%	89.19	87.53	100.00
At least 100%	78.38	85.87	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 100/0 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 October 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 - Oct 2024

Period: Nov 1924 - Oct 2024

Period: Nov 1974 - Oct 2024

Table Chart

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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 1908	0.000 Jun 1910	1.421 Jul 1911	3.563 Sep 1929	5.426 Sep 1929	8.369	9.025	10.590	13.914
	20 Years Worst Period (from)	0.000 May 1901	0.860 Jul 1901	1.765 Sep 1929	2.546 Sep 1929	3.326 Sep 1929	5.136	5.481	6.153	8.905
	30 Years Worst Period (from)	1.062 Jun 1902	1.981 Jun 1902	2.619 Sep 1929	2.757 Sep 1929	2.895 Sep 1929	4.369	4.660	5.210	7.427
	40 Years Worst Period (from)	2.492 Sep 1929	2.565 Sep 1929	2.637 Sep 1929	2.710 Sep 1929	2.782 Sep 1929	4.020	4.239	4.744	6.558
	50 Years Worst Period (from)	2.391 Sep 1929	2.466 Sep 1929	2.542 Sep 1929	2.617 Sep 1929	2.693 Sep 1929	3.831	4.045	4.490	5.972
	60 Years Worst Period (from)	2.526 Sep 1929	2.553 Sep 1929	2.581 Sep 1929	2.608 Sep 1929	2.636 Sep 1929	3.898	4.113	4.683	6.020
	70 Years Worst Period (from)	2.581 Sep 1929	2.589 Sep 1929	2.598 Sep 1929	2.606 Sep 1929	2.615 Sep 1929	3.842	4.033	4.659	6.125
	80 Years Worst Period (from)	2.562 Sep 1929	2.573 Sep 1929	2.583 Sep 1929	2.594 Sep 1929	2.605 Sep 1929	3.781	3.974	4.511	5.814

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

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 1928	0.000 Sep 1929	1.653 Mar 1999	3.563 Sep 1929	5.426 Sep 1929	8.053	8.902	10.431	13.987
	20 Years Worst Period (from)	0.205 Sep 1929	0.985 Sep 1929	1.765 Sep 1929	2.546 Sep 1929	3.326 Sep 1929	4.960	5.267	6.079	9.019
	30 Years Worst Period (from)	2.343 Sep 1929	2.481 Sep 1929	2.619 Sep 1929	2.757 Sep 1929	2.895 Sep 1929	4.223	4.532	5.261	7.990
	40 Years Worst Period (from)	2.492 Sep 1929	2.565 Sep 1929	2.637 Sep 1929	2.710 Sep 1929	2.782 Sep 1929	3.939	4.193	4.758	7.012
	50 Years Worst Period (from)	2.391 Sep 1929	2.466 Sep 1929	2.542 Sep 1929	2.617 Sep 1929	2.693 Sep 1929	3.738	3.969	4.380	6.154
	60 Years Worst Period (from)	2.526 Sep 1929	2.553 Sep 1929	2.581 Sep 1929	2.608 Sep 1929	2.636 Sep 1929	3.990	4.438	4.948	6.665
	70 Years Worst Period (from)	2.581 Sep 1929	2.589 Sep 1929	2.598 Sep 1929	2.606 Sep 1929	2.615 Sep 1929	3.795	4.427	5.556	7.597
	80 Years Worst Period (from)	2.562 Sep 1929	2.573 Sep 1929	2.583 Sep 1929	2.594 Sep 1929	2.605 Sep 1929	3.316	3.971	4.759	6.635

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

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 Nov 1998	0.000 Jan 1999	1.653 Mar 1999	4.875 Sep 2000	7.497 Sep 2000	9.350	10.279	11.414	14.658
	20 Years Worst Period (from)	2.010 Apr 2000	2.678 Apr 2000	3.346 Apr 2000	4.014 Apr 2000	4.682 Apr 2000	5.405	6.236	7.975	9.847
	30 Years Worst Period (from)	5.841 Sep 1987	6.097 Sep 1987	6.353 Sep 1987	6.609 Sep 1987	6.865 Sep 1987	7.452	7.756	8.216	8.819

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

Portfolio Main Page:
US Stocks/Bonds 100/0 Portfolio

For the US Stocks/Bonds 100/0 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

Success Rate of a 5% Withdrawal Strategy

5% vs Perpetual/Safe Withdrawal Rates

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