US Stocks/Bonds 30/70 Portfolio: 4.5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 4.5% withdrawal strategy and implemented the US Stocks/Bonds 30/70 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 4.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 67.65% of cases, and for 50 years in the 24.94% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.733% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 4.5% Withdrawal Strategy

Let's calculate the success rate of a 4.5% Withdrawal Strategy, on the US Stocks/Bonds 30/70 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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

4.5% Withdrawal Rate	% Success
4.5% 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	100.00	67.65	40.53	24.94	23.34	21.55	20.86
Fail Rate(%)	0.00	0.00	32.35	59.47	75.06	76.66	78.45	79.14
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	83.07	50.10	33.07	22.69	20.67	19.56	19.39
At least 50%	90.45	61.67	41.02	29.04	20.13	17.39	17.18	18.38
At least 75%	69.48	46.17	36.65	25.09	15.64	14.73	15.69	17.25
At least 100%	42.85	34.10	32.28	22.24	13.07	12.24	14.40	16.57

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

4.5% Withdrawal Rate	% Success
4.5% 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	100.00	70.15	35.51	8.82	5.82	4.99	2.07
Fail Rate(%)	0.00	0.00	29.85	64.49	91.18	94.18	95.01	97.93
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	84.70	49.46	26.77	6.82	4.16	1.94	0.41
At least 50%	93.06	61.39	39.00	23.72	4.99	0.42	0.28	0.00
At least 75%	69.84	41.83	34.13	22.19	1.33	0.00	0.00	0.00
At least 100%	39.22	29.45	29.01	19.42	0.67	0.00	0.00	0.00

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

4.5% Withdrawal Rate	% Success
4.5% Withdrawal Rate	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%	90.44	75.90	98.34
At least 100%	57.59	67.87	87.97

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 30/70 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

4.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 4.5% 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 Feb 1908	0.000 Mar 1910	2.102 Jul 1911	5.183 Jul 1911	7.771 Dec 1915	8.805	9.606	10.475	12.086
	20 Years Worst Period (from)	0.000 Oct 1898	0.561 Jul 1901	2.078 Jul 1901	3.596 Jul 1901	4.719 Apr 1911	5.089	5.227	5.503	7.015
	30 Years Worst Period (from)	1.128 Jul 1890	2.056 Dec 1945	2.684 Feb 1946	3.276 May 1901	3.733 May 1901	3.975	4.078	4.282	5.240
	40 Years Worst Period (from)	1.046 Apr 1940	1.589 Apr 1940	2.133 Apr 1940	2.677 Apr 1940	3.155 Feb 1946	3.403	3.543	3.700	4.224
	50 Years Worst Period (from)	1.937 Dec 1936	2.146 Feb 1937	2.352 Feb 1937	2.558 Feb 1937	2.763 Feb 1937	2.999	3.195	3.364	3.763
	60 Years Worst Period (from)	2.154 Mar 1937	2.263 Mar 1937	2.373 Mar 1937	2.481 Feb 1937	2.589 Feb 1937	2.819	2.978	3.153	3.587
	70 Years Worst Period (from)	2.172 May 1911	2.301 Feb 1937	2.369 Feb 1937	2.437 Feb 1937	2.505 Feb 1937	2.700	2.838	3.003	3.541
	80 Years Worst Period (from)	2.142 May 1901	2.253 May 1901	2.351 Feb 1937	2.398 Feb 1937	2.446 Feb 1937	2.616	2.730	2.886	3.386

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 1936	0.000 Oct 1971	2.940 Oct 1971	5.735 Jun 1972	8.239 Jan 1973	9.318	9.770	10.443	11.975
	20 Years Worst Period (from)	0.000 Aug 1961	1.089 Oct 1961	2.595 Oct 1961	3.922 May 1965	4.842 Sep 1968	5.089	5.247	5.601	6.873
	30 Years Worst Period (from)	1.395 Dec 1945	2.056 Dec 1945	2.684 Feb 1946	3.306 Feb 1946	3.862 Feb 1937	4.003	4.072	4.297	5.175
	40 Years Worst Period (from)	1.046 Apr 1940	1.589 Apr 1940	2.133 Apr 1940	2.677 Apr 1940	3.155 Feb 1946	3.338	3.468	3.667	4.083
	50 Years Worst Period (from)	1.937 Dec 1936	2.146 Feb 1937	2.352 Feb 1937	2.558 Feb 1937	2.763 Feb 1937	2.906	2.985	3.309	3.688
	60 Years Worst Period (from)	2.154 Mar 1937	2.263 Mar 1937	2.373 Mar 1937	2.481 Feb 1937	2.589 Feb 1937	2.711	2.790	3.055	3.513
	70 Years Worst Period (from)	2.232 Feb 1937	2.301 Feb 1937	2.369 Feb 1937	2.437 Feb 1937	2.505 Feb 1937	2.614	2.662	2.825	3.497
	80 Years Worst Period (from)	2.256 Feb 1937	2.304 Feb 1937	2.351 Feb 1937	2.398 Feb 1937	2.446 Feb 1937	2.539	2.563	2.640	3.032

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)	0.713 Mar 1999	3.314 Mar 1999	5.835 Feb 1999	8.324 Feb 1999	9.890 Jan 1977	10.671	10.965	11.326	12.493
	20 Years Worst Period (from)	2.390 Nov 2003	3.465 Nov 2003	4.509 Feb 1999	5.376 Feb 1999	6.243 Feb 1999	6.432	6.564	6.854	8.021
	30 Years Worst Period (from)	3.734 Nov 1993	4.316 Nov 1993	4.898 Nov 1993	5.375 Jan 1977	5.685 Jan 1977	5.923	6.071	6.294	6.784

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

Portfolio Main Page:
US Stocks/Bonds 30/70 Portfolio

For the US Stocks/Bonds 30/70 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 4.5% Withdrawal Strategy

4.5% vs Perpetual/Safe Withdrawal Rates

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