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

Last Update: 31 May 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.952% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - May 2024
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2.5%
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
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%
90.07
93.45
99.87
100.00
100.00
100.00
100.00
100.00
At least 100%
76.95
83.27
97.91
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: Jun 1924 - May 2024
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2.5%
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
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: Jun 1974 - May 2024
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2.5%
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%
99.17
100.00
100.00
At least 100%
91.06
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 May 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 - May 2024
Period: Jun 1924 - May 2024
Period: Jun 1974 - May 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
May 1908
0.000
Mar 1910
1.966
Jul 1911
5.097
Jul 1911
7.870
Dec 1915
8.923 9.848 10.690 12.680
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 5.961 7.615
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 4.770 5.989
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 4.211 4.937
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 3.903 4.449
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 3.616 3.808 4.350
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 3.720 4.359
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 3.617 4.189
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
Dec 1938
0.202
Jul 1972
2.921
Jul 1972
5.606
Jun 1972
7.968
Jan 1973
9.453 9.971 10.684 12.641
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 7.491
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
3.647 3.721 3.933 4.393
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 4.549
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 4.308
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
Feb 1999
1.999
Mar 1999
4.922
Mar 1999
7.392
Sep 2000
9.691
Sep 2000
10.594 10.890 11.329 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 7.300 8.628
30 Years
Worst Period (from)
4.872
Nov 1993
5.338
Nov 1993
5.676
Jun 1974
5.944
Jun 1974
6.211
Jun 1974
6.428 6.720 6.884 7.432
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 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 May 2024

Related Pages

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