US Stocks/Bonds 40/60 Portfolio: 3.5% withdrawal simulation

Last Update: 30 September 2024

You decided on a 3.5% withdrawal strategy and implemented the US Stocks/Bonds 40/60 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 3.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 100% of cases, and for 50 years in the 88.76% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.851% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 3.5% Withdrawal Strategy

Let's calculate the success rate of a 3.5% Withdrawal Strategy, on the US Stocks/Bonds 40/60 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Sep 2024
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3.5%
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
100.00
100.00
99.85
88.76
79.84
70.28
61.85
Fail Rate(%)
0.00
0.00
0.00
0.15
11.24
20.16
29.72
38.15
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
99.87
91.43
79.29
71.67
65.01
59.93
At least 50%
98.09
90.78
90.98
78.18
68.70
65.10
62.33
58.01
At least 75%
82.97
75.16
67.09
63.03
57.30
59.33
59.54
55.76
At least 100%
61.76
57.04
50.94
51.32
49.68
52.75
57.26
53.84
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Oct 1924 - Sep 2024
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3.5%
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
100.00
100.00
100.00
87.35
80.67
75.35
66.80
Fail Rate(%)
0.00
0.00
0.00
0.00
12.65
19.33
24.65
33.20
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
100.00
100.00
91.26
78.20
75.05
72.58
65.56
At least 50%
98.98
93.65
93.34
78.09
68.22
70.48
70.64
61.83
At least 75%
82.89
76.69
72.18
64.36
55.57
63.83
66.48
56.02
At least 100%
61.79
55.98
54.58
54.23
43.26
53.22
62.60
53.53
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Oct 1974 - Sep 2024
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3.5%
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
100.00
100.00
At least 75%
98.13
100.00
100.00
At least 100%
81.29
86.70
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 40/60 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 August 2024

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 - Sep 2024
Period: Oct 1924 - Sep 2024
Period: Oct 1974 - Sep 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
Apr 1908
0.000
Mar 1910
2.040
Jul 1911
5.144
Jul 1911
7.824
Dec 1915
8.887 9.769 10.588 12.407
20 Years
Worst Period (from)
0.000
Jan 1899
0.644
Jul 1901
2.157
Jul 1901
3.670
Jul 1901
4.823
Jul 1911
5.178 5.384 5.745 7.285
30 Years
Worst Period (from)
1.544
Jul 1890
2.379
Jun 1902
2.969
Jun 1902
3.429
May 1901
3.851
Jul 1901
4.124 4.296 4.529 5.641
40 Years
Worst Period (from)
1.846
Apr 1940
2.316
Apr 1940
2.785
Apr 1940
3.172
Mar 1937
3.423
Jul 1901
3.691 3.789 3.952 4.586
50 Years
Worst Period (from)
2.397
Jul 1901
2.585
Jul 1901
2.770
Feb 1937
2.942
Feb 1937
3.114
Mar 1937
3.368 3.475 3.629 4.090
60 Years
Worst Period (from)
2.597
Mar 1937
2.685
Mar 1937
2.773
Mar 1937
2.862
Mar 1937
2.950
Mar 1937
3.192 3.322 3.498 3.947
70 Years
Worst Period (from)
2.572
Jul 1911
2.678
Jul 1901
2.750
Jul 1901
2.819
Mar 1937
2.873
Mar 1937
3.090 3.189 3.363 3.914
80 Years
Worst Period (from)
2.488
Jul 1901
2.568
Jul 1901
2.648
Jul 1901
2.728
Jul 1901
2.808
Jul 1901
3.000 3.088 3.246 3.741
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)
0.000
Dec 1936
0.199
Oct 1971
2.957
Jul 1972
5.679
Jun 1972
8.111
Jan 1973
9.408 9.890 10.580 12.361
20 Years
Worst Period (from)
0.000
Oct 1961
1.441
Oct 1961
2.875
Apr 1962
4.026
May 1965
4.845
Sep 1968
5.162 5.462 5.882 7.156
30 Years
Worst Period (from)
2.116
Feb 1946
2.681
Feb 1946
3.246
Feb 1946
3.622
May 1965
3.962
Nov 1965
4.164 4.334 4.594 5.684
40 Years
Worst Period (from)
1.846
Apr 1940
2.316
Apr 1940
2.785
Apr 1940
3.172
Mar 1937
3.539
Mar 1937
3.719 3.787 3.948 4.570
50 Years
Worst Period (from)
2.424
Feb 1937
2.597
Feb 1937
2.770
Feb 1937
2.942
Feb 1937
3.114
Mar 1937
3.381 3.468 3.607 4.018
60 Years
Worst Period (from)
2.597
Mar 1937
2.685
Mar 1937
2.773
Mar 1937
2.862
Mar 1937
2.950
Mar 1937
3.196 3.310 3.511 3.891
70 Years
Worst Period (from)
2.655
Mar 1937
2.710
Mar 1937
2.764
Mar 1937
2.819
Mar 1937
2.873
Mar 1937
3.090 3.169 3.393 3.998
80 Years
Worst Period (from)
2.673
Feb 1937
2.710
Feb 1937
2.746
Feb 1937
2.783
Mar 1937
2.819
Mar 1937
3.014 3.059 3.203 3.695
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)
0.000
Mar 1999
2.683
Mar 1999
5.413
Feb 1999
7.895
Sep 2000
10.127
Jan 1977
10.598 10.915 11.359 12.885
20 Years
Worst Period (from)
2.736
Apr 2000
3.569
Apr 2000
4.402
Apr 2000
5.234
Apr 2000
6.067
Apr 2000
6.313 6.578 7.041 8.319
30 Years
Worst Period (from)
4.324
Nov 1993
4.844
Nov 1993
5.363
Nov 1993
5.667
Jan 1977
5.954
Jan 1977
6.183 6.405 6.608 7.103
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 40/60 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 August 2024

Related Pages

Portfolio Main Page:
US Stocks/Bonds 40/60 Portfolio

For the US Stocks/Bonds 40/60 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