US Stocks/Bonds 70/30 Portfolio: 5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 5% withdrawal strategy and implemented the US Stocks/Bonds 70/30 Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 5% withdrawal strategy, you would have lived on your investiment for 30 years in the 80.44% of cases, and for 50 years in the 53.37% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.961% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5% Withdrawal Strategy

Let's calculate the success rate of a 5% Withdrawal Strategy, on the US Stocks/Bonds 70/30 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Nov 2024

Swipe left to see all data

5% Withdrawal Rate	% Success
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	99.07	80.44	67.47	53.37	52.30	54.27	47.41
Fail Rate(%)	0.00	0.93	19.56	32.53	46.63	47.70	45.73	52.59
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	99.94	86.88	74.60	62.21	50.08	50.89	53.47	47.30
At least 50%	88.72	72.82	64.45	54.97	47.44	48.67	52.58	46.96
At least 75%	77.43	65.24	56.45	50.58	44.07	47.78	52.18	46.62
At least 100%	58.74	55.60	52.55	45.61	41.83	46.63	50.89	46.17

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1924 - Nov 2024

Swipe left to see all data

5% Withdrawal Rate	% Success
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	98.54	82.28	70.60	55.24	61.54	75.07	64.32
Fail Rate(%)	0.00	1.46	17.72	29.40	44.76	38.46	24.93	35.68
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	87.20	78.00	66.30	52.08	60.71	74.79	64.32
At least 50%	89.08	75.03	71.46	60.33	50.42	58.84	73.41	63.07
At least 75%	77.71	66.18	66.35	57.42	46.92	57.38	72.85	62.66
At least 100%	59.48	56.82	61.36	52.98	43.43	55.51	70.08	61.41

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1974 - Nov 2024

Swipe left to see all data

5% Withdrawal Rate	% Success
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	98.61	100.00
At least 50%	95.22	91.69	100.00
At least 75%	89.40	86.98	100.00
At least 100%	73.18	79.50	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 70/30 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 November 2024

5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 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 - Nov 2024

Period: Dec 1924 - Nov 2024

Period: Dec 1974 - Nov 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 Jun 1908	0.000 Jun 1910	1.783 Jul 1911	4.975 Jul 1911	7.642 Jan 1973	8.821	9.598	10.792	13.262
	20 Years Worst Period (from)	0.000 Apr 1901	0.815 Jul 1901	2.326 Jul 1901	3.838 Jul 1901	4.674 Dec 1968	5.290	5.600	6.079	8.235
	30 Years Worst Period (from)	1.644 Jun 1902	2.355 Jun 1902	3.066 Jun 1902	3.764 Dec 1968	3.961 Dec 1968	4.394	4.606	5.020	6.675
	40 Years Worst Period (from)	2.871 Jul 1901	3.077 Jul 1901	3.282 Jul 1901	3.487 Jul 1901	3.692 Dec 1968	3.996	4.167	4.523	5.635
	50 Years Worst Period (from)	2.954 Jul 1901	3.079 Jul 1901	3.204 Jul 1901	3.329 Jul 1901	3.453 Jul 1901	3.762	3.940	4.239	5.104
	60 Years Worst Period (from)	3.176 Jul 1901	3.220 Jul 1901	3.264 Jul 1901	3.308 Jul 1901	3.352 Jul 1901	3.749	3.937	4.292	5.088
	70 Years Worst Period (from)	3.188 Jul 1901	3.217 Jul 1901	3.247 Jul 1901	3.277 Jul 1901	3.306 Jul 1901	3.690	3.875	4.259	5.178
	80 Years Worst Period (from)	3.140 Jul 1901	3.171 Jul 1901	3.202 Jul 1901	3.233 Jul 1901	3.264 Jul 1901	3.613	3.790	4.131	4.928

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 Jun 1964	0.000 Oct 1964	2.786 Jul 1972	5.407 Jun 1972	7.642 Jan 1973	9.101	9.738	10.753	13.202
	20 Years Worst Period (from)	0.867 Apr 1962	2.171 Apr 1962	3.232 Sep 1929	3.993 Dec 1968	4.674 Dec 1968	5.223	5.593	6.239	8.232
	30 Years Worst Period (from)	2.912 Feb 1965	3.244 Feb 1965	3.552 Nov 1965	3.764 Dec 1968	3.961 Dec 1968	4.347	4.656	5.200	7.100
	40 Years Worst Period (from)	2.888 Dec 1968	3.089 Dec 1968	3.290 Dec 1968	3.491 Dec 1968	3.692 Dec 1968	4.000	4.238	4.589	5.907
	50 Years Worst Period (from)	3.074 Sep 1929	3.213 Sep 1929	3.353 Sep 1929	3.440 Dec 1968	3.518 Dec 1968	3.790	3.967	4.238	5.216
	60 Years Worst Period (from)	3.267 Sep 1929	3.321 Sep 1929	3.376 Sep 1929	3.431 Sep 1929	3.486 Sep 1929	3.950	4.111	4.505	5.335
	70 Years Worst Period (from)	3.349 Sep 1929	3.369 Sep 1929	3.390 Sep 1929	3.410 Sep 1929	3.431 Sep 1929	4.015	4.360	4.795	5.853
	80 Years Worst Period (from)	3.319 Sep 1929	3.340 Sep 1929	3.361 Sep 1929	3.382 Sep 1929	3.403 Sep 1929	3.860	4.104	4.577	5.364

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 Nov 1998	0.457 Mar 1999	3.757 Mar 1999	6.383 Sep 2000	8.797 Sep 2000	10.137	10.861	11.368	14.058
	20 Years Worst Period (from)	2.451 Apr 2000	3.190 Apr 2000	3.929 Apr 2000	4.668 Apr 2000	5.407 Apr 2000	5.957	6.493	7.586	9.128
	30 Years Worst Period (from)	5.639 Sep 1987	5.946 Sep 1987	6.241 Jan 1977	6.473 Jan 1977	6.705 Jan 1977	6.961	7.245	7.454	8.026

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

Portfolio Main Page:
US Stocks/Bonds 70/30 Portfolio

For the US Stocks/Bonds 70/30 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 5% Withdrawal Strategy

5% vs Perpetual/Safe Withdrawal Rates

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