Last Update: 28 February 2023
You decided on a 4% withdrawal strategy and implemented the Warren Buffett Portfolio: how likely, so far, your investment would have been enough for your retirement?.
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 4% Withdrawal Strategy
Let's calculate the success rate of a 4% Withdrawal Strategy, on the Warren Buffett 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.
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):
The Perpetual Withdrawal Rate (PWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, preserving the original invested capital, adjusted for inflation too. In this website, you can find PWRs with 100% Capital Protection, or less.
The Safe Withdrawal Rate (SWR) is the percentage of the initial portfolio balance that can be withdrawn at the beginning of each month with inflation adjustment, without the portfolio running out of money. In this website, you can find SWRs with 100% Success rate, or less.
Learn more about Withdrawal Rate simulation
Data Sources and Credits
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- Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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. In this website, you can find PWRs with 100% Capital Protection, or less.
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. In this website, you can find SWRs with 100% Success rate, or less.
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.
Swipe left to see all data
| 4% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
99.87
|
97.27
|
93.47
|
89.24
|
93.95
|
92.30
|
| Fail Rate(%) |
0.13
|
2.73
|
6.53
|
10.76
|
6.05
|
7.70
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
99.87
|
97.27
|
93.47
|
89.24
|
93.95
|
92.30
|
| At least 25% |
97.42
|
94.89
|
90.87
|
87.45
|
93.22
|
91.59
|
| At least 50% |
88.03
|
90.18
|
86.19
|
85.49
|
92.23
|
90.37
|
| At least 75% |
77.88
|
85.14
|
82.93
|
83.13
|
91.51
|
89.67
|
| At least 100% |
72.15
|
78.53
|
79.96
|
80.44
|
90.61
|
89.46
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 4% Withdrawal Rate |
% Success
|
|||||
|---|---|---|---|---|---|---|
| 20 Years | 30 Years | 40 Years | 50 Years | 60 Years | 70 Years | |
| Success Rate (%) |
99.79
|
95.24
|
89.60
|
84.03
|
95.43
|
93.91
|
| Fail Rate(%) |
0.21
|
4.76
|
10.40
|
15.97
|
4.57
|
6.09
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |||||
| At least 0% |
99.79
|
95.24
|
89.60
|
84.03
|
95.43
|
93.91
|
| At least 25% |
95.84
|
91.44
|
87.10
|
82.03
|
94.80
|
93.91
|
| At least 50% |
85.02
|
88.94
|
84.05
|
79.53
|
93.76
|
93.35
|
| At least 75% |
75.03
|
84.54
|
81.69
|
76.87
|
93.14
|
93.07
|
| At least 100% |
69.72
|
79.55
|
78.50
|
74.38
|
92.52
|
93.07
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Swipe left to see all data
| 4% Withdrawal Rate |
% Success
|
|
|---|---|---|
| 20 Years | 30 Years | |
| Success Rate (%) |
100.00
|
100.00
|
| Fail Rate(%) |
0.00
|
0.00
|
| Preserved Capital (infl. adj.) | % Success, on % Preserved Capital | |
| At least 0% |
100.00
|
100.00
|
| At least 25% |
99.72
|
100.00
|
| At least 50% |
93.63
|
99.59
|
| At least 75% |
88.92
|
99.17
|
| At least 100% |
84.76
|
97.51
|
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Simulations are calculated with actual returns of Warren Buffett 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 January 2023
4% vs Perpetual/Safe Withdrawal Rates
Let's compare a 4% 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.
Swipe left to see all data
|
PWR (%) - Perpetual Withdrawal Rate
|
SWR (%) - Safe Withdrawal Rate
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Preserved Capital | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
20 Years Worst Period (from) |
0.000 May 1901 |
0.968 Jul 1901 |
2.053 Sep 1929 |
2.920 Sep 1929 |
3.787 Sep 1929 |
4.958 | 5.357 | 6.057 | 8.678 | |
|
30 Years Worst Period (from) |
1.785 Jun 1902 |
2.526 Jun 1902 |
2.906 Sep 1929 |
3.071 Sep 1929 |
3.237 Sep 1929 |
4.242 | 4.618 | 5.110 | 7.086 | ||
|
40 Years Worst Period (from) |
2.687 Dec 1968 |
2.803 Sep 1929 |
2.897 Sep 1929 |
2.990 Sep 1929 |
3.084 Sep 1929 |
3.923 | 4.208 | 4.587 | 6.188 | ||
|
50 Years Worst Period (from) |
2.534 Sep 1929 |
2.640 Sep 1929 |
2.746 Sep 1929 |
2.852 Sep 1929 |
2.958 Sep 1929 |
3.714 | 3.980 | 4.317 | 5.716 | ||
|
60 Years Worst Period (from) |
2.717 Sep 1929 |
2.755 Sep 1929 |
2.793 Sep 1929 |
2.831 Sep 1929 |
2.869 Sep 1929 |
3.936 | 4.128 | 4.625 | 5.757 | ||
|
70 Years Worst Period (from) |
2.792 Sep 1929 |
2.804 Sep 1929 |
2.815 Sep 1929 |
2.827 Sep 1929 |
2.838 Sep 1929 |
3.873 | 4.073 | 4.593 | 5.827 | ||
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 | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
20 Years Worst Period (from) |
0.319 Sep 1929 |
1.186 Sep 1929 |
2.053 Sep 1929 |
2.920 Sep 1929 |
3.787 Sep 1929 |
4.799 | 5.021 | 5.853 | 8.724 | |
|
30 Years Worst Period (from) |
2.575 Sep 1929 |
2.741 Sep 1929 |
2.906 Sep 1929 |
3.071 Sep 1929 |
3.237 Sep 1929 |
4.019 | 4.354 | 4.962 | 7.620 | ||
|
40 Years Worst Period (from) |
2.687 Dec 1968 |
2.803 Sep 1929 |
2.897 Sep 1929 |
2.990 Sep 1929 |
3.084 Sep 1929 |
3.733 | 3.975 | 4.475 | 6.447 | ||
|
50 Years Worst Period (from) |
2.534 Sep 1929 |
2.640 Sep 1929 |
2.746 Sep 1929 |
2.852 Sep 1929 |
2.958 Sep 1929 |
3.544 | 3.727 | 4.148 | 5.848 | ||
|
60 Years Worst Period (from) |
2.717 Sep 1929 |
2.755 Sep 1929 |
2.793 Sep 1929 |
2.831 Sep 1929 |
2.869 Sep 1929 |
4.021 | 4.284 | 4.754 | 6.462 | ||
|
70 Years Worst Period (from) |
2.792 Sep 1929 |
2.804 Sep 1929 |
2.815 Sep 1929 |
2.827 Sep 1929 |
2.838 Sep 1929 |
3.829 | 4.354 | 5.263 | 7.002 | ||
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 | 100% | 75% | 50% | 25% | 0% | 0% | 0% | 0% | 0% | ||
| Success Rate | 100% | 100% | 100% | 100% | 100% | 95% | 90% | 80% | 50% | ||
| Timeframes |
20 Years Worst Period (from) |
1.814 Apr 2000 |
2.522 Apr 2000 |
3.230 Apr 2000 |
3.937 Apr 2000 |
4.645 Apr 2000 |
5.092 | 5.615 | 6.793 | 9.672 | |
|
30 Years Worst Period (from) |
3.457 Mar 1973 |
3.711 Mar 1973 |
3.966 Mar 1973 |
4.220 Mar 1973 |
4.475 Mar 1973 |
5.759 | 6.765 | 7.483 | 8.544 | ||
Legend:
SWR 100% Success
95% Success
90% Success
PWR 100% Capital Protection
75%
50% Protection
25%
Simulations are calculated with actual returns of Warren Buffett 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 January 2023
Related Pages
Portfolio Main Page:
Warren Buffett Portfolio
For the Warren Buffett Portfolio, we have prepared a report for each available timeframe:
20-Year
30-Year
40-Year
50-Year
60-Year
70-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