Last Update: 30 November 2024
You decided on a 7% 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 7% withdrawal strategy, you would have lived on your investiment for 30 years in the 32.26% of cases, and for 50 years in the 8.33% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.952% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 7% Withdrawal Strategy
Let's calculate the success rate of a 7% 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
| 7% 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
|
62.69
|
32.26
|
16.96
|
8.33
|
6.56
|
5.65
|
5.07
|
| Fail Rate(%) |
0.00
|
37.31
|
67.74
|
83.04
|
91.67
|
93.44
|
94.35
|
94.93
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
92.36
|
45.46
|
22.78
|
15.06
|
7.13
|
6.29
|
4.86
|
4.95
|
| At least 50% |
75.12
|
35.63
|
17.20
|
13.23
|
6.25
|
5.14
|
4.56
|
4.62
|
| At least 75% |
47.11
|
22.14
|
13.64
|
11.92
|
4.17
|
4.17
|
4.37
|
4.05
|
| At least 100% |
25.58
|
15.11
|
11.36
|
9.72
|
3.13
|
3.72
|
3.77
|
3.72
|
| 7% 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
|
62.33
|
29.49
|
11.10
|
0.33
|
0.42
|
0.55
|
0.83
|
| Fail Rate(%) |
0.00
|
37.67
|
70.51
|
88.90
|
99.67
|
99.58
|
99.45
|
99.17
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
94.91
|
43.91
|
18.79
|
10.12
|
0.33
|
0.42
|
0.55
|
0.83
|
| At least 50% |
75.95
|
34.03
|
12.72
|
8.74
|
0.33
|
0.42
|
0.55
|
0.83
|
| At least 75% |
46.16
|
17.48
|
9.27
|
8.32
|
0.17
|
0.42
|
0.55
|
0.41
|
| At least 100% |
24.42
|
10.09
|
7.61
|
6.66
|
0.00
|
0.42
|
0.55
|
0.00
|
| 7% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
100.00
|
84.21
|
75.10
|
| Fail Rate(%) |
0.00
|
15.79
|
24.90
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
100.00
|
70.36
|
53.94
|
| At least 50% |
90.02
|
55.12
|
40.25
|
| At least 75% |
60.08
|
32.41
|
31.12
|
| At least 100% |
34.72
|
24.10
|
25.31
|
7% vs Perpetual/Safe Withdrawal Rates
Let's compare a 7% 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.
|
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 | 5.994 | ||
|
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 | 4.941 | ||
|
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 | 4.458 | ||
|
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 | 3.608 | 3.800 | 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 | 4.195 | ||
|
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 | 12.623 | |
|
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 | 7.469 | ||
|
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 |
3.610 | 3.713 | 3.915 | 4.371 | ||
|
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 | 4.518 | ||
|
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 | 4.262 | ||
|
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 | 7.234 | 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 | 7.432 | ||
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
