US Stocks/Bonds 90/10 Portfolio: 5% withdrawal simulation

Last Update: 31 October 2024

You decided on a 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 5% withdrawal strategy, you would have lived on your investiment for 30 years in the 83.25% of cases, and for 50 years in the 67.44% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.312% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5% Withdrawal Strategy

Let's calculate the success rate of a 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Oct 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	97.57	83.25	74.62	67.44	69.65	69.41	63.81
Fail Rate(%)	0.00	2.43	16.75	25.38	32.56	30.35	30.59	36.19
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	99.83	86.87	78.61	71.98	64.80	67.88	68.52	63.36
At least 50%	87.78	77.22	74.45	68.69	62.55	65.93	67.92	63.13
At least 75%	77.71	69.32	67.85	65.03	59.82	64.33	67.33	62.57
At least 100%	64.68	63.66	61.40	62.40	58.06	62.82	66.53	62.12

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Nov 1924 - Oct 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	96.05	83.95	75.31	66.56	76.72	84.21	75.10
Fail Rate(%)	0.00	3.95	16.05	24.69	33.44	23.28	15.79	24.90
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	99.81	85.74	80.14	73.51	64.06	76.30	83.66	75.10
At least 50%	86.49	76.90	77.05	71.84	62.90	74.43	83.38	75.10
At least 75%	77.52	70.55	73.48	69.49	60.90	73.60	83.38	74.69
At least 100%	65.49	64.00	70.15	68.24	60.23	72.77	83.38	74.69

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Nov 1974 - Oct 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	99.72	100.00
Fail Rate(%)	0.00	0.28	0.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	100.00	95.01	100.00
At least 50%	94.18	91.14	100.00
At least 75%	89.40	87.53	100.00
At least 100%	77.55	85.32	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 October 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 - Oct 2024

Period: Nov 1924 - Oct 2024

Period: Nov 1974 - Oct 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	1.554 Jul 1911	4.474 Sep 1929	6.307 Sep 1929	8.530	9.217	10.669	13.742
	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	6.161	8.724
	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	5.176	7.225
	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	4.704	6.274
	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	4.433	5.703
	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	4.103	4.582	5.732
	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	4.567	5.887
	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	4.436	5.563

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 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	8.779
	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	4.092	4.344	4.869	6.302
	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	6.977
	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

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	0.000 Feb 1999	2.405 Mar 1999	5.375 Sep 2000	7.923 Sep 2000	9.621	10.499	11.388	14.454
	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	9.615
	30 Years Worst Period (from)	5.806 Sep 1987	6.077 Sep 1987	6.348 Sep 1987	6.619 Sep 1987	6.890 Sep 1987	7.273	7.570	7.973	8.600

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

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

Success Rate of a 5% Withdrawal Strategy

5% vs Perpetual/Safe Withdrawal Rates

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