Warren Buffett Portfolio: 7.5% withdrawal simulation

Last Update: 30 November 2024

You decided on a 7.5% withdrawal strategy and implemented the Warren Buffett Portfolio: how likely, so far, your investment would have been enough for your retirement?.

With a 7.5% withdrawal strategy, you would have lived on your investiment for 30 years in the 45.36% of cases, and for 50 years in the 26.36% 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Worst case scenario so far, over a 30-year time horizon, you could have withdrawn 3.237% of your initial capital each year, kept withdrawing all the time (adjusting for inflation), and you wouldn't have run out of money before 30 years.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 7.5% Withdrawal Strategy

Let's calculate the success rate of a 7.5% 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  • Each month, money is withdrawn from the portfolio. The withdrawal rate is calculated based on the initial withdrawn, annualized.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
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7.5%
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
99.48
64.49
45.36
33.41
26.36
27.30
28.47
21.17
Fail Rate(%)
0.52
35.51
54.64
66.59
73.64
72.70
71.53
78.83
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
84.90
55.78
42.54
31.73
25.64
26.24
28.17
21.17
At least 50%
72.45
47.14
37.77
30.04
24.28
25.35
27.18
20.50
At least 75%
58.28
36.94
32.93
28.58
23.48
24.56
26.59
19.82
At least 100%
42.42
30.22
27.49
27.34
22.28
23.76
25.69
19.82
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1924 - Nov 2024
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7.5%
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
99.17
62.23
51.25
37.86
26.12
30.15
37.40
17.84
Fail Rate(%)
0.83
37.77
48.75
62.14
73.88
69.85
62.60
82.16
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
83.44
54.53
48.51
35.64
24.96
28.69
37.40
17.84
At least 50%
70.40
47.24
43.16
33.15
23.46
28.27
36.01
17.84
At least 75%
57.54
38.09
37.46
30.79
22.63
27.23
35.46
17.01
At least 100%
44.68
31.32
30.08
28.85
21.96
26.61
34.90
17.01
Legend: Min% of Protected Capital
Min 0%
Min 25%
Min 50%
Min 75%
Min 100%
Period: Dec 1974 - Nov 2024
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7.5%
Withdrawal Rate
% Success
10 Years 20 Years 30 Years
Success Rate (%)
At least 0% Preserved Capital
100.00
77.56
87.14
Fail Rate(%)
0.00
22.44
12.86
Preserved Capital (infl. adj.) % Success, on % Preserved Capital
At least 25%
92.31
69.81
82.99
At least 50%
80.04
62.88
70.54
At least 75%
66.32
45.43
60.17
At least 100%
56.96
35.46
49.79
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

7.5% vs Perpetual/Safe Withdrawal Rates

Let's compare a 7.5% 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
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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
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
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
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 November 2024

Related Pages

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