US Stocks/Bonds 30/70 Portfolio: 5% withdrawal simulation

Last Update: 30 April 2024

You decided on a 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 5% withdrawal strategy, you would have lived on your investiment for 30 years in the 53.41% of cases, and for 50 years in the 18.21% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.733% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5% Withdrawal Strategy

Let's calculate the success rate of a 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Apr 2024
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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
96.94
53.41
31.67
18.21
14.36
12.59
13.05
Fail Rate(%)
0.00
3.06
46.59
68.33
81.79
85.64
87.41
86.95
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
70.27
41.59
27.41
15.15
12.04
11.59
12.60
At least 50%
85.65
52.78
36.60
22.19
12.65
10.44
11.29
12.37
At least 75%
63.10
38.16
31.26
19.32
11.04
9.99
10.99
11.92
At least 100%
35.56
28.48
21.88
15.94
9.27
9.46
10.39
11.69
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1924 - Apr 2024
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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
96.57
52.68
25.10
5.66
0.42
0.00
0.00
Fail Rate(%)
0.00
3.43
47.32
74.90
94.34
99.58
100.00
100.00
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
73.99
39.12
22.33
3.16
0.00
0.00
0.00
At least 50%
86.77
50.88
34.36
19.00
0.33
0.00
0.00
0.00
At least 75%
63.92
33.92
27.94
14.84
0.00
0.00
0.00
0.00
At least 100%
30.80
21.85
18.19
10.96
0.00
0.00
0.00
0.00
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1974 - Apr 2024
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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
82.83
98.34
At least 75%
83.16
73.96
82.99
At least 100%
45.53
48.75
61.41
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 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 April 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 - Apr 2024
Period: May 1924 - Apr 2024
Period: May 1974 - Apr 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
Feb 1908
0.000
Mar 1910
2.102
Jul 1911
5.183
Jul 1911
7.771
Dec 1915
8.805 9.606 10.475 12.092
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 5.501 7.027
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 4.281 5.233
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 4.213
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 3.759
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 3.152 3.596
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 3.001 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 2.884 3.392
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
Nov 1936
0.000
Oct 1971
2.940
Oct 1971
5.735
Jun 1972
8.239
Jan 1973
9.318 9.770 10.443 12.010
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 6.887
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 3.523
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 3.498
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 3.058
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)
0.713
Mar 1999
3.314
Mar 1999
5.835
Feb 1999
8.024
May 1974
9.890
Jan 1977
10.603 10.913 11.294 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 6.875 8.021
30 Years
Worst Period (from)
3.734
Nov 1993
4.316
Nov 1993
4.898
Nov 1993
5.325
May 1974
5.630
May 1974
5.902 6.060 6.245 6.784
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 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 April 2024

Related Pages

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