Last Update: 30 April 2023
You decided on a 8% 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.
Success Rate of a 8% Withdrawal Strategy
Let's calculate the success rate of a 8% 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.
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):
The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.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The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. 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.
Swipe left to see all data
| 8% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
26.87
|
7.22
|
1.85
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
73.13
|
92.78
|
98.15
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
26.87
|
7.22
|
1.85
|
0.00
|
0.00
|
0.00
|
| At least 25% |
16.24
|
4.77
|
0.44
|
0.00
|
0.00
|
0.00
|
| At least 50% |
10.01
|
2.93
|
0.07
|
0.00
|
0.00
|
0.00
|
| At least 75% |
6.73
|
1.23
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 100% |
3.59
|
0.07
|
0.00
|
0.00
|
0.00
|
0.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 8% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
22.79
|
3.92
|
1.11
|
0.00
|
0.00
|
0.00
|
| Fail Rate(%) |
77.21
|
96.08
|
98.89
|
100.00
|
100.00
|
100.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
22.79
|
3.92
|
1.11
|
0.00
|
0.00
|
0.00
|
| At least 25% |
11.45
|
2.73
|
0.28
|
0.00
|
0.00
|
0.00
|
| At least 50% |
5.83
|
1.55
|
0.14
|
0.00
|
0.00
|
0.00
|
| At least 75% |
3.33
|
0.36
|
0.00
|
0.00
|
0.00
|
0.00
|
| At least 100% |
1.66
|
0.12
|
0.00
|
0.00
|
0.00
|
0.00
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 8% Withdrawal Rate |
% Success
|
|
|---|---|---|
| 20 Years | 30 Years | |
| Success Rate (%) |
42.38
|
13.69
|
| Fail Rate(%) |
57.62
|
86.31
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |
| At least 0% |
42.38
|
13.69
|
| At least 25% |
20.50
|
9.54
|
| At least 50% |
15.51
|
5.39
|
| At least 75% |
8.86
|
1.24
|
| At least 100% |
4.43
|
0.41
|
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 April 2023
8% vs Perpetual/Safe Withdrawal Rates
Let's compare a 8% 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.
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 | 4.687 | ||
|
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 | 3.828 | ||
|
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 | 3.418 | ||
|
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 | 3.217 | ||
|
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%
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 | 3.166 | ||
|
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%
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 |
4.252 May 1973 |
4.889 May 1973 |
5.526 May 1973 |
6.426 | 6.494 | 6.648 | 7.756 | |
|
30 Years Worst Period (from) |
3.316 May 1973 |
3.642 May 1973 |
3.969 May 1973 |
4.296 May 1973 |
4.622 May 1973 |
5.397 | 5.610 | 5.834 | 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 April 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