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

Last Update: 31 May 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 80.36% of cases, and for 50 years in the 53.14% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.961% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - May 2024
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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
99.06
80.36
67.33
53.14
52.58
53.99
47.05
Fail Rate(%)
0.00
0.94
19.64
32.67
46.86
47.42
46.01
52.95
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
99.94
86.83
74.49
62.04
49.84
51.16
53.19
46.94
At least 50%
88.68
72.72
64.30
54.77
47.18
48.93
52.30
46.60
At least 75%
77.35
65.11
56.28
50.37
43.80
48.04
51.90
46.26
At least 100%
58.59
55.49
52.36
45.37
41.55
46.88
50.60
45.80
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Jun 1924 - May 2024
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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
98.54
82.28
70.60
55.24
62.79
75.07
64.32
Fail Rate(%)
0.00
1.46
17.72
29.40
44.76
37.21
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
61.95
74.79
64.32
At least 50%
89.08
75.03
71.46
60.33
50.42
60.08
73.41
63.07
At least 75%
77.71
66.18
66.35
57.42
46.92
58.63
72.85
62.66
At least 100%
59.48
56.92
61.36
52.98
43.43
56.76
70.08
61.41
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Jun 1974 - May 2024
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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
98.61
100.00
At least 50%
95.22
91.69
100.00
At least 75%
89.19
86.98
100.00
At least 100%
72.56
79.78
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 May 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 - 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
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 6.070 8.244
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 5.017 6.664
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 4.521 5.630
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 5.092
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
3.761 3.948 4.303 5.097
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 4.257 5.168
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 4.118 4.911
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
Jun 1964
0.000
Oct 1964
2.786
Jul 1972
5.407
Jun 1972
7.642
Jan 1973
9.101 9.738 10.753 13.207
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 8.270
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
4.016 4.184 4.545 5.402
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 5.877
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
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 11.361 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 7.632 9.130
30 Years
Worst Period (from)
5.639
Sep 1987
5.928
Jun 1974
6.166
Jun 1974
6.403
Jun 1974
6.641
Jun 1974
6.921 7.202 7.443 7.995
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 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 May 2024

Related Pages

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