US Stocks/Bonds 40/60 Portfolio: how to retire safely

Last Update: 30 April 2023

The US Stocks/Bonds 40/60 Portfolio invests in 2 asset classes and can be suitable for a retirement plan.

In this post we will find out the most affordable withdrawal strategies for the US Stocks/Bonds 40/60 Portfolio. All calculations are made on actual historical series.

Key Points

The US Stocks/Bonds 40/60 Portfolio is allocated for 40% on Stocks.

In the period Jan 1871 - Apr 2023, the portfolio granted a 6.65% annualized return, with a -45.05% maximum drawdown.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.851% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.

With a 4% withdrawal strategy, you would have lived on your investiment for 30 years in the 99.05% of cases, and for 50 years in the 53.86% of cases

You can implement the portfolio, let it passively follow the market trend, and in the meantime you can periodically withdraw a portion of it for your retirement.

The US Stocks/Bonds 40/60 Portfolio

The US Stocks/Bonds 40/60 Portfolio contains 40% Stocks, 60% Bonds.

Weight Asset Class Category
40.00 % Total US Stock Market Stocks
60.00 % Total US Bond Market Fixed Income

Over the last 30 years (last update: April 2023), the portfolio has returned 6.79% annualized, with a maximum drawdown of -21.12%.

6.603% has been a safe withdrawal rate.

Let's consider different timeframes, all ending at April 2023: which Withdrawal Rates could you have applied without running out of money in your retirement?

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.

A Perpetual Withdrawal Rate (PWR) protected the original inflation adjusted capital.

A Safe Withdrawal Rate (SWR) didn't protect the original capital, but the portfolio didn't run out of money during retirement. The portfolio went to zero exaclty at the end of the retirement period.

Learn more about Withdrawal Rate simulation
Swipe left to see all data
Timeframes ending at Apr 2023
Withdrawal Rate (%)
Investment Performances
Timeframe Period from Period to Perpetual Safe Ann.Return(%)
[ Infl.Adj. ]
Max
Drawdown(%)
20 Years 1 May 2003
30 Apr 2023 3.617 7.285 6.12
[ 3.49 ]
-21.12
Nov 2007 - Feb 2009
30 Years 1 May 1993
30 Apr 2023 4.663 6.603 6.79
[ 4.17 ]
-21.12
Nov 2007 - Feb 2009
40 Years 1 May 1983
30 Apr 2023 6.128 7.105 8.08
[ 5.09 ]
-21.12
Nov 2007 - Feb 2009
50 Years 1 May 1973
30 Apr 2023 3.666 4.179 8.41
[ 4.28 ]
-21.12
Nov 2007 - Feb 2009
60 Years 1 May 1963
30 Apr 2023 3.165 3.517 7.96
[ 3.91 ]
-21.12
Nov 2007 - Feb 2009
70 Years 1 May 1953
30 Apr 2023 4.257 4.498 7.96
[ 4.27 ]
-21.12
Nov 2007 - Feb 2009
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 April 2023

Withdrawal Rates Simulation (updated at Apr 2023)

During your retirement, tipically you want to divest periodically some amount of money from your portfolio, without running out of money over a long period.

Based on how long your retirement is, what would it be an acceptable withdrawal rate, for the US Stocks/Bonds 40/60 Portfolio?

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

In the table below, we analyze different key withdrawal rates, based on the length of retirement. To focus on a specific timeframe for this portfolio, click on the links in the table.

Period: Jan 1871 - Apr 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
Jan 1899
0.644
Jul 1901
2.157
Jul 1901
3.670
Jul 1901
4.823
Jul 1911
5.175 5.377 5.741 7.330
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 4.293 4.523 5.605
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
3.690 3.787 3.948 4.567
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 3.473 3.626 4.078
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
3.190 3.314 3.508 3.960
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
3.088 3.181 3.352 3.887
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: May 1923 - Apr 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
Oct 1961
1.441
Oct 1961
2.875
Apr 1962
4.026
May 1965
4.845
Sep 1968
5.162 5.462 5.882 7.224
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 3.542 3.923
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
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Period: May 1973 - Apr 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)
2.736
Apr 2000
3.569
Apr 2000
4.402
Apr 2000
5.077
May 1973
5.669
May 1973
6.236 6.447 7.002 8.319
30 Years
Worst Period (from)
3.669
May 1973
3.964
May 1973
4.260
May 1973
4.556
May 1973
4.851
May 1973
5.848 6.157 6.547 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 April 2023

Withdrawals and Success Rate

If you had implemented a specific Withdrawal Strategy with the US Stocks/Bonds 40/60 Portfolio, which would have been the success rate so far?

Simulations follow the same rules mentioned before. Withdrawals are expressed as yearly rates and refer to the initial capital. After that, withdrawal amount is monthly adjusted for inflation.

Success rates are calculated over all the past timeframes available in the data source. To focus on a specific withdrawal rate, click on the links in the table.

Period: Jan 1871 - Apr 2023
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Withdrawal
Rate
20 Years
30 Years
40 Years
50 Years
60 Years
70 Years
% Success Percentile % Success Percentile % Success Percentile % Success Percentile % Success Percentile % Success Percentile
2.00 %
100.00
100.00
100.00
100.00
100.00
100.00
2.50 %
100.00
100.00
100.00
100.00
100.00
100% Succ.
2.950%
100.00
100% Succ.
2.873%
3.00 %
100.00
100.00
100.00
100% Succ.
3.423%
100.00
100% Succ.
3.114%
99.55
95% Succ.
3.190%
98.48
95% Succ.
3.088%
3.50 %
100.00
100.00
100% Succ.
3.851%
99.85
95% Succ.
3.690%
88.61
80% Succ.
3.626%
80.52
80% Succ.
3.508%
69.77
50% Succ.
3.887%
4.00 %
100.00
99.05
95% Succ.
4.124%
77.69
53.86
50% Succ.
4.078%
48.60
46.71
4.50 %
100.00
100% Succ.
4.823%
81.21
80% Succ.
4.523%
52.48
50% Succ.
4.567%
35.88
32.19
31.85
5.00 %
97.99
95% Succ.
5.175%
60.99
37.44
23.52
22.00
20.73
5.50 %
86.53
80% Succ.
5.741%
51.87
50% Succ.
5.605%
29.58
16.92
15.15
14.66
6.00 %
74.83
40.84
21.72
13.18
10.37
9.91
6.50 %
66.90
33.15
16.09
8.71
7.21
6.57
7.00 %
56.20
50% Succ.
7.330%
24.57
11.93
5.61
3.70
1.92
7.50 %
46.70
16.41
9.04
2.60
0.45
0.00
8.00 %
38.64
12.25
5.41
0.33
0.00
0.00
Period: May 1923 - Apr 2023
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Withdrawal
Rate
20 Years
30 Years
40 Years
50 Years
60 Years
70 Years
% Success Percentile % Success Percentile % Success Percentile % Success Percentile % Success Percentile % Success Percentile
2.00 %
100.00
100.00
100.00
100.00
100.00
100.00
2.50 %
100.00
100.00
100.00
100.00
100.00
100% Succ.
2.950%
100.00
100% Succ.
2.873%
3.00 %
100.00
100.00
100.00
100.00
100% Succ.
3.114%
99.38
95% Succ.
3.196%
98.34
95% Succ.
3.090%
3.50 %
100.00
100.00
100% Succ.
3.962%
100.00
100% Succ.
3.539%
87.35
80% Succ.
3.607%
82.95
80% Succ.
3.542%
75.35
50% Succ.
3.998%
4.00 %
100.00
99.41
95% Succ.
4.164%
78.22
51.41
50% Succ.
4.018%
46.78
49.86
4.50 %
100.00
100% Succ.
4.845%
83.35
80% Succ.
4.594%
52.43
50% Succ.
4.570%
29.62
24.32
23.27
5.00 %
97.81
95% Succ.
5.162%
64.92
35.78
11.15
11.02
11.63
5.50 %
89.28
80% Succ.
5.882%
52.32
50% Succ.
5.684%
23.99
7.99
4.78
4.16
6.00 %
78.15
40.67
17.20
3.49
1.04
0.00
6.50 %
68.68
30.92
10.96
0.50
0.00
0.00
7.00 %
55.57
50% Succ.
7.224%
21.40
7.07
0.00
0.00
0.00
7.50 %
45.58
12.60
4.72
0.00
0.00
0.00
8.00 %
38.09
8.44
2.77
0.00
0.00
0.00
Period: May 1973 - Apr 2023
Swipe left to see all data
Withdrawal
Rate
20 Years
30 Years
% Success Percentile % Success Percentile
2.00 %
100.00
100.00
2.50 %
100.00
100.00
3.00 %
100.00
100.00
3.50 %
100.00
100.00
4.00 %
100.00
100.00
4.50 %
100.00
100.00
100% Succ.
4.851%
5.00 %
100.00
97.93
5.50 %
100.00
100% Succ.
5.669%
95.44
95% Succ.
5.848%
6.00 %
98.06
95% Succ.
6.236%
93.78
90% Succ.
6.157%
6.50 %
89.20
81.33
80% Succ.
6.547%
7.00 %
80.06
80% Succ.
7.002%
55.19
50% Succ.
7.103%
7.50 %
69.53
36.10
8.00 %
60.11
27.39
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 April 2023

Related Pages

For the US Stocks/Bonds 40/60 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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