US Stocks/Bonds 60/40 Portfolio: 4.5% withdrawal simulation

Last Update: 30 April 2024

You decided on a 4.5% withdrawal strategy and implemented the US Stocks/Bonds 60/40 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 4.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 91.42% of cases, and for 50 years in the 62.61% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.999% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 4.5% Withdrawal Strategy

Let's calculate the success rate of a 4.5% Withdrawal Strategy, on the US Stocks/Bonds 60/40 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Apr 2024
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4.5%
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
91.42
77.08
62.61
59.32
58.24
51.99
Fail Rate(%)
0.00
0.00
8.58
22.92
37.39
40.68
41.76
48.01
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
94.13
82.71
69.51
57.21
56.20
56.94
51.31
At least 50%
92.56
79.58
70.22
60.91
51.89
52.90
56.04
49.83
At least 75%
79.95
67.83
59.08
52.61
47.62
50.49
54.15
49.60
At least 100%
60.49
56.40
52.19
46.58
44.00
47.99
53.15
48.69
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1924 - Apr 2024
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4.5%
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
92.63
80.03
63.56
67.57
76.18
65.98
Fail Rate(%)
0.00
0.00
7.37
19.97
36.44
32.43
23.82
34.02
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
100.00
95.01
85.37
73.51
58.07
65.28
74.52
65.15
At least 50%
93.62
82.00
76.93
65.19
52.91
61.12
73.41
62.24
At least 75%
80.67
69.61
68.25
57.84
47.42
58.63
70.91
62.24
At least 100%
60.50
57.02
60.40
52.01
43.59
55.72
69.81
60.58
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: May 1974 - Apr 2024
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4.5%
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%
99.38
98.06
100.00
At least 75%
91.48
90.58
100.00
At least 100%
74.22
81.44
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 60/40 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 2024

4.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 4.5% 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 - Apr 2024
Period: May 1924 - Apr 2024
Period: May 1974 - Apr 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
Jun 1910
1.880
Jul 1911
5.040
Jul 1911
7.811
Jan 1973
8.891 9.787 10.790 12.980
20 Years
Worst Period (from)
0.000
Jan 1901
0.771
Jul 1901
2.282
Jul 1901
3.792
Jul 1901
4.748
Dec 1968
5.276 5.561 6.057 7.895
30 Years
Worst Period (from)
1.731
Jun 1902
2.395
Jun 1902
3.058
Jun 1902
3.669
Jul 1901
3.999
Dec 1968
4.320 4.549 4.935 6.333
40 Years
Worst Period (from)
2.786
Jul 1901
2.994
Jul 1901
3.201
Jul 1901
3.408
Jul 1901
3.615
Jul 1901
3.928 4.092 4.399 5.281
50 Years
Worst Period (from)
2.805
Jul 1901
2.946
Jul 1901
3.087
Jul 1901
3.228
Jul 1901
3.369
Jul 1901
3.672 3.829 4.095 4.778
60 Years
Worst Period (from)
3.028
Jul 1901
3.084
Jul 1901
3.140
Jul 1901
3.195
Jul 1901
3.251
Jul 1901
3.641 3.807 4.091 4.728
70 Years
Worst Period (from)
3.037
Jul 1901
3.076
Jul 1901
3.115
Jul 1901
3.154
Jul 1901
3.194
Jul 1901
3.537 3.709 4.018 4.779
80 Years
Worst Period (from)
2.973
Jul 1901
3.015
Jul 1901
3.057
Jul 1901
3.098
Jul 1901
3.140
Jul 1901
3.453 3.631 3.918 4.546
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
Jun 1964
0.167
Jul 1972
2.864
Jul 1972
5.515
Jun 1972
7.811
Jan 1973
9.354 9.938 10.790 12.918
20 Years
Worst Period (from)
0.646
Apr 1962
1.969
Apr 1962
3.246
Aug 1964
4.052
Dec 1968
4.748
Dec 1968
5.224 5.585 6.233 7.895
30 Years
Worst Period (from)
2.793
Feb 1965
3.138
Feb 1965
3.483
Feb 1965
3.783
Nov 1965
3.999
Dec 1968
4.298 4.595 5.075 6.620
40 Years
Worst Period (from)
2.882
Dec 1968
3.088
Dec 1968
3.295
Dec 1968
3.501
Dec 1968
3.707
Dec 1968
3.940 4.172 4.512 5.511
50 Years
Worst Period (from)
3.161
Sep 1929
3.258
Dec 1968
3.346
Dec 1968
3.433
Dec 1968
3.521
Dec 1968
3.725 3.843 4.116 4.822
60 Years
Worst Period (from)
3.364
Mar 1937
3.421
Mar 1937
3.477
Mar 1937
3.533
Mar 1937
3.590
Mar 1937
3.871 4.017 4.261 4.916
70 Years
Worst Period (from)
3.396
Mar 1937
3.429
Mar 1937
3.463
Mar 1937
3.497
Mar 1937
3.531
Mar 1937
3.924 4.117 4.397 5.158
80 Years
Worst Period (from)
3.404
Mar 1937
3.425
Mar 1937
3.446
Mar 1937
3.467
Mar 1937
3.488
Mar 1937
3.753 3.936 4.178 4.821
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 1998
1.258
Mar 1999
4.362
Mar 1999
6.887
Sep 2000
9.242
Sep 2000
10.380 10.872 11.383 13.680
20 Years
Worst Period (from)
2.567
Apr 2000
3.334
Apr 2000
4.102
Apr 2000
4.869
Apr 2000
5.637
Apr 2000
6.085 6.543 7.476 8.864
30 Years
Worst Period (from)
5.222
May 1974
5.474
May 1974
5.726
May 1974
5.978
May 1974
6.230
May 1974
6.669 6.928 7.151 7.725
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 60/40 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 2024

Related Pages

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

For the US Stocks/Bonds 60/40 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