US Stocks/Bonds 90/10 Portfolio: 2.5% withdrawal simulation

Last Update: 30 April 2024

You decided on a 2.5% withdrawal strategy and implemented the US Stocks/Bonds 90/10 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.312% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 90/10 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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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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%
99.30
99.81
100.00
100.00
100.00
100.00
100.00
100.00
At least 75%
89.25
98.00
99.86
100.00
100.00
100.00
100.00
100.00
At least 100%
79.84
89.57
99.59
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: May 1924 - Apr 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%
99.81
99.79
100.00
100.00
100.00
100.00
100.00
100.00
At least 75%
88.16
98.86
100.00
100.00
100.00
100.00
100.00
100.00
At least 100%
79.00
91.36
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: May 1974 - Apr 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%
99.79
100.00
100.00
At least 75%
94.59
100.00
100.00
At least 100%
89.60
99.72
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 90/10 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

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 - 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
Jun 1908
0.000
Jun 1910
1.554
Jul 1911
4.474
Sep 1929
6.307
Sep 1929
8.530 9.217 10.668 13.732
20 Years
Worst Period (from)
0.000
May 1901
0.859
Jul 1901
2.241
Sep 1929
3.051
Sep 1929
3.861
Sep 1929
5.217 5.535 6.159 8.737
30 Years
Worst Period (from)
1.318
Jun 1902
2.155
Jun 1902
2.981
Sep 1929
3.146
Sep 1929
3.312
Sep 1929
4.408 4.659 5.172 7.218
40 Years
Worst Period (from)
2.796
Sep 1929
2.886
Sep 1929
2.977
Sep 1929
3.067
Sep 1929
3.157
Sep 1929
4.040 4.230 4.701 6.246
50 Years
Worst Period (from)
2.665
Sep 1929
2.758
Sep 1929
2.850
Sep 1929
2.942
Sep 1929
3.034
Sep 1929
3.833 4.043 4.430 5.693
60 Years
Worst Period (from)
2.817
Sep 1929
2.852
Sep 1929
2.886
Sep 1929
2.921
Sep 1929
2.955
Sep 1929
3.878 4.119 4.603 5.751
70 Years
Worst Period (from)
2.880
Sep 1929
2.892
Sep 1929
2.903
Sep 1929
2.914
Sep 1929
2.926
Sep 1929
3.816 4.044 4.565 5.867
80 Years
Worst Period (from)
2.858
Sep 1929
2.872
Sep 1929
2.885
Sep 1929
2.898
Sep 1929
2.911
Sep 1929
3.747 3.958 4.434 5.554
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
Apr 1928
0.000
Oct 1964
2.405
Mar 1999
4.474
Sep 1929
6.307
Sep 1929
8.419 9.217 10.557 13.793
20 Years
Worst Period (from)
0.622
Sep 1929
1.431
Sep 1929
2.241
Sep 1929
3.051
Sep 1929
3.861
Sep 1929
5.066 5.394 6.179 8.845
30 Years
Worst Period (from)
2.649
Sep 1929
2.815
Sep 1929
2.981
Sep 1929
3.146
Sep 1929
3.312
Sep 1929
4.285 4.595 5.269 7.732
40 Years
Worst Period (from)
2.796
Sep 1929
2.886
Sep 1929
2.977
Sep 1929
3.067
Sep 1929
3.157
Sep 1929
4.001 4.218 4.727 6.718
50 Years
Worst Period (from)
2.665
Sep 1929
2.758
Sep 1929
2.850
Sep 1929
2.942
Sep 1929
3.034
Sep 1929
3.759 3.997 4.372 5.904
60 Years
Worst Period (from)
2.817
Sep 1929
2.852
Sep 1929
2.886
Sep 1929
2.921
Sep 1929
2.955
Sep 1929
4.170 4.379 4.927 6.356
70 Years
Worst Period (from)
2.880
Sep 1929
2.892
Sep 1929
2.903
Sep 1929
2.914
Sep 1929
2.926
Sep 1929
4.070 4.503 5.494 7.032
80 Years
Worst Period (from)
2.858
Sep 1929
2.872
Sep 1929
2.885
Sep 1929
2.898
Sep 1929
2.911
Sep 1929
3.603 4.170 4.763 6.383
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
0.000
Feb 1999
2.405
Mar 1999
5.375
Sep 2000
7.923
Sep 2000
9.621 10.499 11.376 14.456
20 Years
Worst Period (from)
2.170
Apr 2000
2.860
Apr 2000
3.549
Apr 2000
4.239
Apr 2000
4.928
Apr 2000
5.607 6.341 7.874 9.619
30 Years
Worst Period (from)
5.796
May 1974
6.011
May 1974
6.227
May 1974
6.442
May 1974
6.658
May 1974
7.260 7.484 7.940 8.590
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 90/10 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 90/10 Portfolio

For the US Stocks/Bonds 90/10 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