US Stocks/Bonds 50/50 Portfolio: 2.5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 2.5% withdrawal strategy and implemented the US Stocks/Bonds 50/50 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 2.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 100% of cases, and for 50 years in the 100% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.952% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 2.5% Withdrawal Strategy

Let's calculate the success rate of a 2.5% Withdrawal Strategy, on the US Stocks/Bonds 50/50 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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

2.5% Withdrawal Rate	% Success
2.5% 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	100.00	100.00	100.00	100.00	100.00	100.00
Fail Rate(%)	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
At least 50%	99.48	99.88	100.00	100.00	100.00	100.00	100.00	100.00
At least 75%	90.10	93.47	99.87	100.00	100.00	100.00	100.00	100.00
At least 100%	77.01	83.32	97.92	100.00	100.00	100.00	100.00	100.00

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

2.5% Withdrawal Rate	% Success
2.5% 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	100.00	100.00	100.00	100.00	100.00	100.00
Fail Rate(%)	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
At least 50%	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
At least 75%	91.03	95.94	100.00	100.00	100.00	100.00	100.00	100.00
At least 100%	78.17	86.26	100.00	100.00	100.00	100.00	100.00	100.00

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

2.5% Withdrawal Rate	% Success
2.5% 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%	99.17	100.00	100.00
At least 100%	91.27	100.00	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 50/50 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

2.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 2.5% 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 May 1908	0.000 Mar 1910	1.966 Jul 1911	5.097 Jul 1911	7.870 Dec 1915	8.923	9.848	10.699	12.669
	20 Years Worst Period (from)	0.000 Jun 1900	0.715 Jul 1901	2.225 Jul 1901	3.736 Jul 1901	4.811 Dec 1968	5.234	5.485	5.964	7.598
	30 Years Worst Period (from)	1.778 Jun 1902	2.402 Jun 1902	3.025 Jun 1902	3.556 Jul 1901	3.952 Jul 1901	4.229	4.444	4.773	5.991
	40 Years Worst Period (from)	2.570 Mar 1937	2.885 Mar 1937	3.100 Jul 1901	3.313 Jul 1901	3.526 Jul 1901	3.824	3.966	4.215	4.940
	50 Years Worst Period (from)	2.621 Jul 1901	2.783 Jul 1901	2.944 Jul 1901	3.106 Jul 1901	3.267 Jul 1901	3.557	3.689	3.905	4.453
	60 Years Worst Period (from)	2.842 Jul 1901	2.914 Jul 1901	2.986 Jul 1901	3.058 Jul 1901	3.130 Jul 1901	3.458	3.610	3.802	4.345
	70 Years Worst Period (from)	2.846 Jul 1901	2.898 Jul 1901	2.951 Jul 1901	3.004 Jul 1901	3.057 Jul 1901	3.330	3.503	3.722	4.366
	80 Years Worst Period (from)	2.760 Jul 1901	2.817 Jul 1901	2.874 Jul 1901	2.932 Jul 1901	2.989 Jul 1901	3.243	3.403	3.618	4.191

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 Dec 1938	0.202 Jul 1972	2.921 Jul 1972	5.606 Jun 1972	7.968 Jan 1973	9.453	9.971	10.684	12.624
	20 Years Worst Period (from)	0.368 Oct 1961	1.746 Apr 1962	3.092 Apr 1962	4.091 Nov 1965	4.811 Dec 1968	5.186	5.541	6.144	7.471
	30 Years Worst Period (from)	2.654 Feb 1965	3.014 Feb 1965	3.373 Feb 1965	3.713 Nov 1965	4.022 Dec 1968	4.243	4.488	4.894	6.113
	40 Years Worst Period (from)	2.570 Mar 1937	2.885 Mar 1937	3.200 Mar 1937	3.494 Dec 1968	3.702 Nov 1965	3.857	4.043	4.269	5.024
	50 Years Worst Period (from)	2.866 Feb 1937	3.010 Feb 1937	3.153 Mar 1937	3.296 Mar 1937	3.438 Mar 1937	3.607	3.708	3.903	4.420
	60 Years Worst Period (from)	3.004 Mar 1937	3.075 Mar 1937	3.146 Mar 1937	3.216 Mar 1937	3.287 Mar 1937	3.615	3.714	3.917	4.374
	70 Years Worst Period (from)	3.047 Mar 1937	3.090 Mar 1937	3.133 Mar 1937	3.176 Mar 1937	3.219 Mar 1937	3.578	3.670	3.944	4.539
	80 Years Worst Period (from)	3.060 Mar 1937	3.087 Mar 1937	3.115 Mar 1937	3.143 Mar 1937	3.170 Mar 1937	3.423	3.566	3.778	4.268

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 Feb 1999	1.999 Mar 1999	4.922 Mar 1999	7.392 Sep 2000	9.691 Sep 2000	10.594	10.901	11.353	13.327
	20 Years Worst Period (from)	2.663 Apr 2000	3.461 Apr 2000	4.260 Apr 2000	5.059 Apr 2000	5.857 Apr 2000	6.208	6.571	7.241	8.628
	30 Years Worst Period (from)	4.872 Nov 1993	5.338 Nov 1993	5.681 Jan 1977	5.948 Jan 1977	6.214 Jan 1977	6.454	6.728	6.903	7.412

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

Portfolio Main Page:
US Stocks/Bonds 50/50 Portfolio

For the US Stocks/Bonds 50/50 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 2.5% Withdrawal Strategy

2.5% vs Perpetual/Safe Withdrawal Rates

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