US Stocks/Bonds 20/80 Portfolio: 3.5% withdrawal simulation

Last Update: 28 February 2023

You decided on a 3.5% withdrawal strategy and implemented the US Stocks/Bonds 20/80 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.

Key Points

You implemented the US Stocks/Bonds 20/80 Portfolio.

With a 3.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 99.05% of cases, and for 50 years in the 44.58% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.435% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.

Success Rate of a 3.5% Withdrawal Strategy

Let's calculate the success rate of a 3.5% Withdrawal Strategy, on the US Stocks/Bonds 20/80 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. 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.

Period: Jan 1871 - Feb 2023
Swipe left to see all data
3.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
100.00
99.05
75.28
44.58
33.24
30.29
Fail Rate(%)
0.00
0.95
24.72
55.42
66.76
69.71
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 0%
100.00
99.05
75.28
44.58
33.24
30.29
At least 25%
99.94
81.80
51.45
33.74
27.91
28.88
At least 50%
74.35
50.44
38.75
27.87
25.84
27.96
At least 75%
55.83
42.19
30.44
23.63
22.40
26.24
At least 100%
39.32
36.13
25.09
19.80
18.88
22.39
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Mar 1923 - Feb 2023
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3.5%
Withdrawal Rate
% Success
20 Years 30 Years 40 Years 50 Years 60 Years 70 Years
Success Rate (%)
100.00
98.34
70.18
34.61
15.80
14.68
Fail Rate(%)
0.00
1.66
29.82
65.39
84.20
85.32
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 0%
100.00
98.34
70.18
34.61
15.80
14.68
At least 25%
100.00
79.90
48.13
17.14
11.23
13.57
At least 50%
74.09
48.39
33.84
11.15
9.98
12.74
At least 75%
55.05
41.74
26.77
8.65
4.99
11.08
At least 100%
35.17
34.48
22.75
3.16
0.83
4.99
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Mar 1973 - Feb 2023
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3.5%
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%
97.23
100.00
At least 100%
77.56
96.68
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 20/80 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 January 2023

3.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 3.5% 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 - Feb 2023
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
Aug 1898
0.207
Jul 1900
1.967
May 1901
3.498
May 1901
4.601
Apr 1911
4.896 5.037 5.294 6.638
30 Years
Worst Period (from)
0.667
Oct 1945
1.394
May 1940
2.084
May 1940
2.773
Nov 1940
3.435
Jan 1941
3.686 3.826 4.004 4.684
40 Years
Worst Period (from)
0.227
Oct 1941
0.866
Apr 1940
1.493
Apr 1940
2.119
Apr 1940
2.726
Jan 1941
2.973 3.178 3.437 3.827
50 Years
Worst Period (from)
1.274
Jun 1934
1.625
Nov 1940
1.867
Nov 1940
2.107
Aug 1939
2.337
Aug 1939
2.531 2.768 3.077 3.417
60 Years
Worst Period (from)
1.687
Mar 1937
1.822
Feb 1937
1.949
Aug 1939
2.065
Aug 1939
2.181
Aug 1939
2.344 2.560 2.781 3.220
70 Years
Worst Period (from)
1.659
May 1911
1.827
Aug 1939
1.916
Aug 1939
2.006
Aug 1939
2.095
Aug 1939
2.225 2.420 2.572 3.075
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Mar 1923 - Feb 2023
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 1960
0.714
Oct 1961
2.281
Oct 1961
3.598
Jan 1940
4.646
Jan 1941
4.860 4.993 5.303 6.573
30 Years
Worst Period (from)
0.667
Oct 1945
1.394
May 1940
2.084
May 1940
2.773
Nov 1940
3.435
Jan 1941
3.595 3.804 3.959 4.616
40 Years
Worst Period (from)
0.227
Oct 1941
0.866
Apr 1940
1.493
Apr 1940
2.119
Apr 1940
2.726
Jan 1941
2.851 2.996 3.349 3.752
50 Years
Worst Period (from)
1.274
Jun 1934
1.625
Nov 1940
1.867
Nov 1940
2.107
Aug 1939
2.337
Aug 1939
2.428 2.530 2.751 3.361
60 Years
Worst Period (from)
1.687
Mar 1937
1.822
Feb 1937
1.949
Aug 1939
2.065
Aug 1939
2.181
Aug 1939
2.253 2.317 2.516 3.169
70 Years
Worst Period (from)
1.737
Aug 1939
1.827
Aug 1939
1.916
Aug 1939
2.006
Aug 1939
2.095
Aug 1939
2.146 2.192 2.325 2.956
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: Mar 1973 - Feb 2023
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)
2.138
Jan 2003
3.265
Jan 2003
4.137
Mar 1973
4.774
Mar 1973
5.411
Mar 1973
6.413 6.482 6.647 7.756
30 Years
Worst Period (from)
3.193
Mar 1973
3.526
Mar 1973
3.858
Mar 1973
4.191
Mar 1973
4.523
Mar 1973
5.045 5.598 5.818 6.487
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 20/80 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 January 2023

Related Pages

Portfolio Main Page:
US Stocks/Bonds 20/80 Portfolio

For the US Stocks/Bonds 20/80 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

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