Last Update: 30 November 2024
You decided on a 5.5% 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 5.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 75.87% of cases, and for 50 years in the 54.65% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.312% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 5.5% Withdrawal Strategy
Let's calculate the success rate of a 5.5% 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.
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money.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.
| 5.5% 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
|
90.67
|
75.87
|
64.99
|
54.65
|
55.76
|
57.94
|
51.80
|
| Fail Rate(%) |
0.00
|
9.33
|
24.13
|
35.01
|
45.35
|
44.24
|
42.06
|
48.20
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
98.61
|
80.29
|
71.57
|
60.96
|
53.21
|
54.61
|
57.44
|
51.24
|
| At least 50% |
85.88
|
70.27
|
65.79
|
58.19
|
50.64
|
53.28
|
57.14
|
51.01
|
| At least 75% |
75.41
|
65.42
|
58.27
|
54.17
|
48.16
|
52.57
|
56.65
|
50.68
|
| At least 100% |
60.88
|
58.27
|
54.64
|
50.07
|
46.15
|
51.15
|
56.05
|
50.34
|
| 5.5% 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
|
87.72
|
77.41
|
66.99
|
57.07
|
66.74
|
79.78
|
69.71
|
| Fail Rate(%) |
0.00
|
12.28
|
22.59
|
33.01
|
42.93
|
33.26
|
20.22
|
30.29
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||||
| At least 25% |
98.33
|
79.50
|
73.96
|
66.02
|
56.41
|
65.70
|
79.50
|
69.29
|
| At least 50% |
84.83
|
71.80
|
70.75
|
63.80
|
54.41
|
64.66
|
78.95
|
69.29
|
| At least 75% |
75.58
|
66.18
|
67.30
|
61.30
|
52.91
|
64.03
|
78.67
|
69.29
|
| At least 100% |
62.26
|
59.31
|
65.40
|
59.22
|
51.41
|
63.41
|
78.12
|
68.88
|
| 5.5% Withdrawal Rate |
% Success
|
||
|---|---|---|---|
| 10 Years | 20 Years | 30 Years | |
|
Success Rate (%) At least 0% Preserved Capital |
100.00
|
95.84
|
100.00
|
| Fail Rate(%) |
0.00
|
4.16
|
0.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | ||
| At least 25% |
99.79
|
91.41
|
100.00
|
| At least 50% |
94.18
|
88.09
|
100.00
|
| At least 75% |
88.77
|
85.04
|
100.00
|
| At least 100% |
73.39
|
80.06
|
100.00
|
5.5% vs Perpetual/Safe Withdrawal Rates
Let's compare a 5.5% 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.
|
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 | 7.231 | ||
|
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 | 6.288 | ||
|
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 | 5.708 | ||
|
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 | 4.102 | 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 | 5.566 | ||
|
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 | 13.786 | |
|
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 | 8.773 | ||
|
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 |
4.078 | 4.340 | 4.848 | 6.274 | ||
|
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 | 6.966 | ||
|
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 | ||
|
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 | 7.838 | 9.609 | ||
|
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 | ||
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
