Warren Buffett Portfolio: 5.5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 5.5% withdrawal strategy and implemented the Warren Buffett 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 74.26% of cases, and for 50 years in the 54.01% of cases.

Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.237% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 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.

▼ 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Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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 - Nov 2024

Swipe left to see all data

5.5% Withdrawal Rate	% Success
5.5% 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	88.31	74.26	63.74	54.01	55.14	58.73	52.36
Fail Rate(%)	0.00	11.69	25.74	36.26	45.99	44.86	41.27	47.64
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	97.51	78.86	70.16	60.45	51.92	54.26	58.33	51.91
At least 50%	84.32	68.66	64.72	57.24	50.24	53.28	57.94	51.80
At least 75%	73.73	63.68	58.74	54.61	48.32	52.30	57.54	51.58
At least 100%	58.68	57.46	54.17	50.58	46.15	51.51	57.34	51.35

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1924 - Nov 2024

Swipe left to see all data

5.5% Withdrawal Rate	% Success
5.5% 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	83.25	73.72	62.69	52.08	61.33	77.01	64.32
Fail Rate(%)	0.00	16.75	26.28	37.31	47.92	38.67	22.99	35.68
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	96.58	75.96	69.92	61.03	50.75	61.12	76.45	64.32
At least 50%	82.24	68.16	66.94	59.50	50.08	60.71	76.18	64.32
At least 75%	72.53	62.64	65.28	58.25	49.08	60.29	75.90	64.32
At least 100%	57.91	56.19	63.38	55.89	48.42	59.67	75.90	63.90

Legend: Min% of Protected Capital

Min 0%

Min 25%

Min 50%

Min 75%

Min 100%

Period: Dec 1974 - Nov 2024

Swipe left to see all data

5.5% Withdrawal Rate	% Success
5.5% Withdrawal Rate	10 Years	20 Years	30 Years
Success Rate (%) At least 0% Preserved Capital	100.00	92.80	100.00
Fail Rate(%)	0.00	7.20	0.00
Preserved Capital (infl. adj.)	% Success, on % Preserved Capital
At least 25%	97.51	89.20	100.00
At least 50%	91.68	84.76	100.00
At least 75%	85.24	81.99	100.00
At least 100%	67.15	75.62	100.00

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 November 2024

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.

Period: Jan 1871 - Nov 2024

Period: Dec 1924 - Nov 2024

Period: Dec 1974 - Nov 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 Mar 1999	4.501 Sep 1929	6.411 Sep 1929	8.417	9.067	10.408	13.698
	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	4.963	5.370	6.062	8.651
	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	4.248	4.630	5.148	7.145
	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	4.211	4.599	6.230
	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	3.720	3.984	4.322	5.696
	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	3.875	4.088	4.549	5.733
	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	4.075	4.628	5.857
	80 Years Worst Period (from)	2.763 Sep 1929	2.778 Sep 1929	2.793 Sep 1929	2.808 Sep 1929	2.823 Sep 1929	3.803	4.008	4.464	5.605

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	1.554 Mar 1999	4.501 Sep 1929	6.411 Sep 1929	8.203	8.966	10.241	13.624
	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	8.550
	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	4.144	5.654
	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	3.747	4.080	4.616	6.132
	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	6.949
	80 Years Worst Period (from)	2.763 Sep 1929	2.778 Sep 1929	2.793 Sep 1929	2.808 Sep 1929	2.823 Sep 1929	3.538	4.018	4.618	6.145

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 Jan 1999	1.554 Mar 1999	4.900 Sep 2000	7.584 Sep 2000	9.020	10.143	10.858	14.575
	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	5.098	5.853	7.404	9.664
	30 Years Worst Period (from)	5.735 Sep 1987	5.991 Apr 1976	6.203 Apr 1976	6.415 Apr 1976	6.627 Apr 1976	6.901	7.335	7.890	8.591

Legend:

SWR 100% Success

95% Success

90% Success

Legend:

PWR 100% Capital Protection

75%

50% Protection

25%

Portfolio Main Page:
Warren Buffett Portfolio

For the Warren Buffett 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 5.5% Withdrawal Strategy

5.5% vs Perpetual/Safe Withdrawal Rates

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